tt&IC:1::''^:.:  ::  T'   •     "••'"•  -.'. 


GIFT   OF 


THE  MACMILLAN  COMPANY 

NEW  YORK    •    BOSTON   •    CHICAGO  •    DALLAS 
ATLANTA   •    SAN    FRANCISCO 

MACMILLAN  &   CO.,  LIMITED 

LONDON  •    BOMBAY   •    CALCUTTA 
MELBOURNE 

THE  MACMILLAN  CO.  OF  CANADA,  LTD. 

TORONTO 


HOUSEHOLD  ACCOUNTING 
AND  ECONOMICS 


BY 
WILLIAM   A.    SHEAFFER,   Pa.B. 

HEAD   OF    COMMERCIAL    DEPARTMENT,    WEST    DIVISION    HIGH   SCHOOL 

MILWAUKEE,    WI8.  ;     INSTRUCTOR   OP   ACCOUNTING 

MARQUETTE    UNIVERSITY 


Wefo  go* 
THE   MACMILLAN   COMPANY 

1917 

All  rights  reserved 


COPYBIQHT,   1917, 

BT  THE  MACMILLAN  COMPANY. 


Set  up  and  electrotyped.     Published  January,  1917. 
Reprinted  April,  August,  1917. 


NorfoooU 

J.  8.  Gushing  Co.  —  Berwick  &  Smith  Co. 
Norwood,  Mass.,  U.S.A. 


TO 

MY  WIFE 


459986 


PREFACE 

THE  management  of  a  home  is  a  business.  The  house- 
keeper of  to-day,  if  she  is  to  manage  a  home  successfully, 
must  be  educated  in  the  various  duties  and  responsibili- 
ties of  her  position.  Courses  in  the  different  branches  of 
domestic  science  in  both  public  and  private  schools  are 
furnishing  this  training  to  the  girls  of  the  country. 

But  this  is  not  enough.  They  should  be  shown  the 
true  basis  of  the  management  of  a  home,  which  lies  in  a 
knowledge  of  the  economic  principles  that  underlie  the 
expenditure  of  the  family  income.  They  should  be  taught 
how  to  plan  their  own  expenditures  and  those  of  the 
family.  They  should  learn  to  keep  their  own  accounts 
and  those  of  the  family  in  order  to  help  in  planning  the 
family  expenditures.  Properly  kept  accounts  furnish  a 
history  of  the  family  expenditures  that  can  be  made  a 
valuable  aid  in  future  planning. 

The  experience  of  home  managers  is  that  a  careful  study 
of  home  economics  and  accounting  makes  it  possible  for 
the  housekeeper  to  plan  more  wisely  the  expenditures  and 
to  save  a  larger  part  of  the  family  income.  The  study  of 
household  economics  is  a  study  of  the  economic  basis  of 
the  family.  The  standard  of  a  family  depends  in  part 
upon  the  income,  but,  above  a  certain  minimum  income, 
it  is  mainly  dependent  upon  the  choice  of  expenditures. 

vii 


viii  PREFACE 

Certain  expenditures  are  necessary,  but  a  study  of  the 
expense  accounts  of  different  families  having  the  same 
income  shows  that  wide  choice  is  possible  even  here. 

Education  in  household  affairs  tends  to  improve  the 
choice  of  the  necessary  expenditures.  It  has  a  tendency 
to  raise  the  standard  of  living,  to  permit  of  a  larger  ex- 
penditure for  the  moral  and  intellectual  advancement  of 
the  family,  and  to  increase  the  family  savings. 

Differences  in  the  size  of  families  and  in  conditions  and 
localities  make  it  difficult  to  set  a  standard  of  expendi- 
tures. Each  family  must  adapt  the  general  economic 
principles  to  its  problems.  A  study  of  the  family  budget 
and  of  personal  and  household  accounting  furnishes  the 
best  means  of  doing  this.  In  addition,  there  are  other 
subjects  that  should  be  included  in  the  study  of  home 
economics  because  of  their  relation  to  the  well-being  of 
the  family.  For  this  reason  it  is  believed  that  the  chap- 
ters on  Savings  Bank  Accounts,  on  Life,  Health,  and 
Accident  Insurance,  and  on  Investments  for  the  Home 
will  be  valuable.  A  study  of  banking  and  legal  princi- 
ples and  of  the  business  letter  is  necessary,  too,  in  order 
that  the  housekeeper's  dealings  with  the  bank  and  with 
others  may  be  conducted  in  a  businesslike  manner  and 
without  loss. 

No  previous  knowledge  of  bookkeeping  or  accounting 
is  necessary  in  the  study  of  this  text.  The  basis  is  an 
economic  one  and  the  methods  and  forms  of  the  book- 
keeper are  modified  to  suit  the  convenience  and  needs  of 
the  housekeeper.  The  text  furnishes  practical,  working 
methods  of  keeping  accounts  and  of  doing  the  other  things 
that  should  form  a  part  of  the  housekeeper's  records. 

The  author  believes  that  a  text  of  this  kind  should  be 
used  in  every  school  where  domestic  science  is  taught. 


PREFACE  ix 

Although  the  book  is  written  primarily  for  girls  taking 
courses  in  home  economics,  it  furnishes  training  valuable 
for  boys  as  well.  A  few  schools  are  giving  elementary 
training  of  this  kind  to  both  boys  and  girls,  and  it  is  to 
be  hoped  that  more  will  soon  do  so. 

The  author  hopes  that  this  book  will  be  a  welcome 
addition  to  the  working  library  of  many  a  housekeeper, 
and  that  it  will  prove  useful  also  to  many  clubs  and  soci- 
eties that  desire  to  study  this  subject. 


TABLE   OF  CONTENTS 


CHAPTER  PAO* 

I.    PERSONAL  ACCOUNTS 1 

II.  PERSONAL  ACCOUNTS  SUMMARIZED     ....  7 

III.  ECONOMICS  OF  THE  HOUSEHOLD          ....  14 

IV.  THE  FAMILY  BUDGET 20 

V.  THE  FAMILY  BUDGET  TABULATED      ....  26 

VI.  How  TO  KEEP  THE  FAMILY  ACCOUNTS      ...  31 

VII.     UNEXPENDED  BALANCES 39 

VIII.  How  TO  OPEN  A  BANK  ACCOUNT       ....  43 

IX.    MAKING  PAYMENTS  BY  CHECK 50 

X.  ENVELOPE     AND     CARD     SYSTEMS     OF     KEEPING 

ACCOUNTS 58 

XI.    KEEPING  CREDIT  ACCOUNTS 66 

XII.  THE  HOUSEHOLD  INVENTORY  AND  FIRE  INSURANCE 

PROTECTION 72 

XIII.  THE  FAMILY  INCOME  AND  FINANCIAL  STATEMENTS  .  79 

XIV.  HOUSEHOLD  ACCOUNTING  SET 88 

XV.    CLUB  AND  SOCIETY  ACCOUNTS 92 

XVI.    SAVINGS  BANK  ACCOUNTS 106 

XVII.  LIFE,  ACCIDENT,  AND  HEALTH  INSURANCE        .        .  114 

XVIII.    INVESTMENTS  FOR  THE  HOME 119 

XIX.  LEGAL  POINTS  EVERY  WOMAN  SHOULD  KNOW         .  129 
XX.  LEGAL  POINTS  EVERY  WOMAN  SHOULD  KNOW  (Con- 
cluded)       138 

XXI.  How  TO  WRITE  A  BUSINESS  LETTER         .        .        .  146 


HOUSEHOLD  ACCOUNTING 
AND  ECONOMICS 


CHAPTER  I 
PERSONAL  ACCOUNTS 

MANY  persons  consider  the  keeping  of  personal  accounts 
a  useless  waste  of  time  and  energy.  The  reason  for  this  is 
largely  due  to  the  fact  that  the  average  person  does  not  know 
how  to  keep  accounts  properly  and  is  not  willing  to  spend 
a  few  minutes  each  day  in  recording  the  day's  expenditures. 
It  is  so  easy  to  put  off  the  record,  hoping  for  a  more  conven- 
ient time  and  then  find  that  it  is  difficult  to  remember  what 
was  done  with  the  money.  Soon  the  person  becomes  satis- 
fied if  he  records  most  of  the  expenditures  and  makes  no 
attempt  to  keep  the  accounts  accurately.  It  is  just  a  step 
further  to  give  up  the  system  entirely  and  keep  no  sys- 
tematic record  of  expenditures. 

But  it  is  almost  impossible  to  practice  any  systematic  plan 
of  spending  money,  or  of  saving  it,  if  one  does  not  keep  an 
accurate  account  of  all  money  received  and  paid  out.  The 
accounts  may  be  kept  in  a  simple  form  or  they  may  be  more 
elaborate,  depending  upon  the  number  of  expenditures  and 
the  information  desired.  The  keeping  of  accounts  is  a  defi- 
nite help  in  planning  the  expenditures  for  a  given  time.  At 
the  beginning  of  each  month  and  each  year  every  person 
B  1 


2        HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

should  make  some  plans  regarding  the  expenditures  for  the 
next  month  or  year.  But  how  can  this  be  done  if  no  ac- 
counts have  been  kept  on  which  to  base  the  planning  ?  Few 
persons  who  do  not  keep  accounts  save  in  any  systematic 
way.  They  do  not  know  where  to  begin  to  save.  If  accounts 
have  been  kept,  a  careful  study  of  the  record  will  reveal 
expenditures  here  and  there  that  could  have  been  saved. 
A  study  of  the  early  life  of  almost  every  person  who  has 
attained  financial  success  will  show  that  a  systematic  keep- 
ing of  accounts  and  a  plan  of  systematic  saving  were 
practiced  early. 

There  are  few  girls  who  will  not  have,  at  some  time,  the 
management  of  a  home.  To  them  the  keeping  of  personal 
accounts  will  furnish  the  necessary  practice  and  training,  as 
well  as  demonstrate  the  importance  of  this  work.  Few 
housewives  keep  accounts;  few  families  know  where  they 
could  save,  simply  because  they  have  no  accurate  knowledge 
of  expenses.  But  there  is  an  increasing  number  of  house- 
wives who  see  the  necessity  for  this  and  who  are  giving  their 
daughters  the  training  that  will  fit  them  to  manage  a  home 
properly.  The  girl  trained  to  keep  her  own  personal  ac- 
counts will  find  it  an  easy  matter  to  increase  her  knowledge 
of  accounts  and  to  extend  her  practice  to  the  keeping  of  the 
accounts  of  a  household. 

It  is  very  desirable  that  every  girl  be  given  a  certain  allow- 
ance weekly  or  monthly,  preferably  weekly  at  first,  and  be 
required  to  keep  certain  definite  kinds  of  expenditures  within 
this  allowance.  Many  a  girl  has  been  thrown  upon  her  own 
resources  or  has  gone  to  college  or  university  with  a  definite 
allowance  or  income  and  has  found  it  difficult  to  keep  within 
the  allowance  because  she  has  had  no  training  in  keeping 
accounts  or  in  planning  her  expenditures.  No  matter  how 


PERSONAL  ACCOUNTS  3 

small  the  allowance,  every  girl  should  take  pride  in  knowing 
just  what  has  been  done  with  every  cent  of  it. 

A  common  and  convenient  form  to  use  in  keeping  personal 
accounts  is  the  two-column  cash  book.  It  may  be  simply 
a  small  pocket  cash  book  or  a  small  note  book  ruled  with  two 
money  columns.  This  is  the  easiest  and  simplest  form,  but  it 
is  not  as  easy  to  make  comparisons  from  it  as  from  a  larger 
cash  book,  divided  into  special  columns  for  the  different 
classes  of  expenditures.  This  method  will  be  explained  and 
illustrated  in  the  next  chapter. 

In  the  two-column  cash  book,  the  first  money  column 
should  be  used  for  the  receipts,  the  second  for  the  expendi- 
tures. Every  item  should  be  dated  and  fully  explained.  The 
only  safe  plan  to  follow  is  to  enter  the  expenditures  daily  and 
not  to  wait  until  a  number  of  expenditures  have  been  made 
and  then  attempt  to  remember  them.  Although  it  is  best  to 
keep  these  accounts  in  ink,  it  is  better  to  enter  them  in  pen- 
cil at  once  than  to  put  it  off.  In  shopping  it  is  desirable  to 
make  a  list  of  purchases  to  be  made  before  going  to  the  store 
and  then  to  record  on  this  list  the  amount  paid  for  each 
article.  At  the  end  of  the  day  these  expenditures  should  be 
entered  in  the  cash  book  and  the  cash  proved.  To  prove 
cash,  add  in  pencil  each  side  of  the  cash  book  and  take  the 
difference.  This  difference  should  agree  with  the  actual 
cash  on  hand.  It  is  a  good  plan  to  put  this  balance  in 
small  figures  to  the  left  of  the  Received  column,  as  it 
shows  that  cash  was  proved  and  what  the  balance  was. 
While  it  is  not  necessary  to  prove  cash  every  day  it 
should  be  done  often  and  whenever  several  expenditures 
have  been  made. 

Weekly,  and  at  the  bottom  of  each  page,  the  cash  book 
should  be  balanced.  This  is  done  by  entering  the  difference 


4        HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

as  Balance  in  the  Paid  column,  ruling  it  up  and  either  bring- 
ing the  balance  down  below  in  the  Received  column,  or,  if  at 
the  bottom  of  the  page,  taking  it  to  the  top  of  the  next  page. 
The  balance  may  be  written  in  red  ink  when  it  is  written  in 
the  Paid  column  and  the  lines  may  be  drawn  in  red  ink.  The 
balance  when  brought  down  in  the  Received  column  should 
always  be  written  in  black  ink. 

The  following  form  will  illustrate  the  method  of  making 
the  entries,  balancing,  and  ruling  already  explained.  The 
closing  at  the  bottom  of  a  page  is  shown  and  the  forwarding 
to  the  top  of  the  next  page. 


PERSONAL  CASH  BOOK 

—/  6,  /tf 


f 

5 
7 
8 

to 


/5 
J5 


eonewt 


L35 


"     "    ttati&n&uy 


"      " 


note, 


on 


50 
25 

.75 

/  0 


07 
0£ 

to 

/  5 

1.83 


PERSONAL  ACCOUNTS 


16 

/6 


Exercise  1.  Rule  a  sheet  of  paper  like  the  model  per- 
sonal cash  book  illustrated  and  enter  the  following  transac- 
tions in  it.  Balance  the  cash  book  weekly,  and  bring  the 
balance  down  on  the  same  sheet. 

Feb.    1.  Received  allowance  for  one  week,  $1.50. 

2.  Paid  for  gloves,  75c. 

4.  Paid  for  car  fare,  25c. 

5.  Paid  for  note  book,  15c. 

6.  Paid  for  concert,  lOc ;  for  candy,  5c. 
Balance  the  cash  book. 

7.  Paid  for  church,  5c. 

8.  Received  allowance  for  one  week,  $1.50. 

9.  Paid  for  handkerchiefs,  50c. 

9.  Received  allowance  for  books  and  supplies,  $4. 

9.  Paid  for  physiology,  $1.20. 

10.  Paid  for  English  book,  $1.15. 

11.  Paid  for  note  book,  30c. 

12.  Paid  for  cooking  text,  $1.25. 

12.  Deposited  in  school  savings  bank,  25c. 

•  This  should  be  entered  the  same  as  any  other  payment 

13.  Paid  for  ribbons,  20c. 
Balance  the  cash  book. 

15.  Received  allowance  for  one  week,  $1.50. 

16.  Paid  for  magazine,  25c;   for  lunch,  16c. 

17.  Paid  for  embroidery,  30c. 

18.  Paid  for  stationery,  25c. 

20.  Paid  for  car  fare,  25c. 
Balance  the  cash  book. 

21.  Paid  for  church,  lOc. 

22.  Received  allowance  for  one  week,  $1.50. 


6        HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

22.  Paid  for  pencils,  8c. 

23.  Paid  for  a  collar,  25c. 

24.  Paid  for  a  tablet,  lOc. 

25.  Paid  for  toilet  water,  35c. 

26.  Paid  for  lunch,  14c. 

26.  Deposited  in  school  savings  bank,  30c. 

27.  Paid  for  lace,  20c. 

28.  Paid  for  church,  lOc. 
Balance  the  cash  book. 


CHAPTER  II 

PERSONAL  ACCOUNTS   SUMMARIZED 

THE  method  of  keeping  account  of  personal  expenditures 
given  in  Chapter  I  is  a  good  record  of  receipts  and  pay- 
ments, especially  if  the  number  of  items  is  not  large,  but  it  is 
difficult  to  find  out  from  this  record  how  much  has  been  ex- 
pended for  each  class  of  expenditures.  Every  person  wishes 
to  know,  for  example,  how  much  has  been  expended  for  books 
and  school  supplies,  how  much  for  clothing,  how  much  for 
amusements,  how  much  for  church  and  charity,  etc.  The 
two-column  cash  book  does  not  give  this  in  any  definite  form. 

To  give  this  information  a  monthly  summary  should  be 
made  to  show  the  amount  expended  for  each  purpose  and  the 
total  amount  expended.  It  is  not  difficult  to  do  this  if  the 
number  of  expenditures  has  not  been  large.  Each  one 
should  first  decide  on  a  classification  of  expenditures  suitable 
to  the  individual  in  this  case.  Each  payment  must  then  be 
classed  under  one  of  these  headings.  For  the  girl  who  meets 
all  her  expenses  from  her  income  the  following  headings  will 
usually  be  found  sufficient :  Board,  Clothing,  Car  Fare, 
Amusements,  Education,  Health,  Church  and  Benevolence, 
Miscellaneous,  and  Savings.  The  expenditures  for  each  of 
the  different  classes  can  easily  be  figured  out  in  pencil  and  the 
total  found. 

It  is  best  to  keep  the  monthly  classification  in  tabular  form. 
A  blank  book  ruled  with  as  many  columns  as  there  are  classes 

7 


8        HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 


CO 


SAVINGS 

** 

1 
MISCELLA- 
NEOUS 

5 

X, 

I8!' 

5 

HEALTH 

V 

EDUCATION 

^ 

AMUSE- 
MENTS 

^M 

V, 

a 

M 

O 

K 

v 

to 
D 

§ 

60 

p 
M 

£ 

5 

TOTAL 
PAYMENTS 

§ 

§ 

I 

4 

of  expenditures,  presupposing  that 
the  allowance  or  the  wages  are  suf- 
ficient to  cover  all  ordinary  per- 
sonal expenditures,  would  be  ruled 
about  as  shown  opposite. 

These  columns  may  be  greatly 
increased  in  number  by  divisions 
of  the  headings  or  by  the  addition 
of  new  ones.  Care  must  be  taken 
to  see  that  the  sum  of  the  distribu- 
tive columns  equals  the  sum  of  the 
Total  Payments  column  and  that 
the  sum  of  the  Total  Payments 
column  equals  the  sum  of  all  the 
payments  for  the  month  as  shown 
by  the  cash  book  from  which  the 
totals  for  the  different  columns 
were  obtained. 

One  can  easily  see  that  the  task 
of  finding  the  amount  expended 
for  each  purpose  may  be  a  rather 
difficult  one  if  the  number  of  ex- 
penditures is  large.  It  is  much 
easier,  also,  to  plan  the  expendi- 
tures for  each  period  if  one  can  see 
at  a  glance  for  what  the  different 
payments  were  made.  For  these 
reasons  a  cash  book  with  distribu- 
tive columns  for  payments  corre- 
sponding to  the  main  divisions  of 
expenditures  is  to  be  preferred  to 
the  ordinary  two-column  cash  book. 


PERSONAL  ACCOUNTS  SUMMARIZED  9 

A  wide  note  book  ruled  with  additional  money  columns  is 
recommended.  The  form  on  pages  10  and  11  may  be  varied 
by  additional  columns  or  by  changing  the  headings  of  some 
to  suit  the  needs  of  the  individual. 

In  this  form  the  date  column  is  used  for  both  receipts  and 
payments.  All  receipts  are  entered  at  the  left,  with  an  ex- 
planation in  the  wide  explanatory  column.  All  payments 
are  itemized  in  the  explanatory  column  and  the  total  for  each 
line  or  date  put  in  the  Total  Payments  column.  This 
amount  is  then  distributed  under  the  proper  headings.  The 
balance  is  found  and  proved  with  the  actual  cash  on  hand, 
either  by  finding  the  difference  between  the  total  receipts 
and  total  payments  for  the  period,  or  by  adding  to  the  last 
balance  any  receipts  since  the  last  balance  was  found  and 
subtracting  the  sum  of  the  payments  since  the  last  balance 
was  found.  For  example,  in  the  illustration  on  pages  10  and 
11,  if  it  is  desired  to  find  the  balance  on  hand  Sept.  27,  the 
total  payments,  $27.90,  would  be  subtracted  from  the  total 
receipts,  $36,  leaving  a  balance  of  $8.10.  Or,  the  payments 
since  the  last  balance  was  found,  $1.60,  may  be  subtracted 
from  the  last  balance,  $9.70,  leaving  a  balance  of  $8.10.  It 
is  well  to  vary  the  methqd  of  finding  the  balance  as  the  latter 
plan,  although  the  easier,  is  also  the  more  conducive  to  errors. 
The  balance  should  be  found  and  proved  with  the  actual 
cash  on  hand  often.  If  the  number  of  expenditures  is  great 
it  is  well  to  find  the  balance  and  prove  the  cash  daily,  other- 
wise, two  or  three  times  a  week  may  be  sufficient. 

At  the  end  of  the  month  there  is  a  double  proof  of  the  cor- 
rectness of  the  amounts.  First,  the  sum  of  the  distribution 
columns  beginning  with  Board  and  ending  with  Savings  must 
equal  the  sum  of  the  Total  Payments  column.  Second,  the 
difference  between  the  Receipts  column  and  the  Total  Pay- 


10      HOUSEHOLD   ACCOUNTING  AND   ECONOMICS 


ments  column  must  equal  the  balance  to  be  transferred  to  the 
next  month.  There  is,  also,  in  that  way  a  proof  of  the  cor- 
rectness of  the  last  balance  if  found  by  the  other  method. 
In  beginning  another  month  the  first  item  is  the  balance 
brought  forward  in  the  Receipts  and  Balance  columns. 
Nothing  else  is  forwarded  monthly.  In  forwarding  during 
the  month,  as  in  the  illustration,  the  balance  is  put  in  the 
Balance  column,  the  total  receipts  for  the  month  to  date  are 
put  in  the  Receipts  column,  the  total  payments  are  put  in 
the  Total  Payments  column,  and  the  sum  of  each  distribu- 
tion column  is  put  in  the  column  to  which  it  belongs. 


CASH 


DATE 


RECEIPTS 


ITEMS 


BALANCE 


TOTAL 
PAYMENTS 


BOAKD 


36  — 


26 


30 
30 
30 


80 


/2 


8 


to 
&oa,V'50  &o-ttet 


3 


70 


10 


8 


70 


30 
26 
36 
/  6 


3 


30 


/  2 


PERSONAL  ACCOUNTS  SUMMARIZED 


11 


With  this  cash  book  a  Summary  page,  ruled  the  same  as 
the  cash  book  from  the  Total  Payments  to  the  last  column, 
should  be  used.  The  totals  of  the  various  columns  should 
be  transferred  to  this  summary  monthly.  The  sum  of  the 
payments  for  the  year  can  then  be  found  by  columns. 

Exercise  2.  Rule  paper  with  columns  the  same  as  the 
cash  book  illustrated  here,  enter  the  transactions  of  Exercise 
1  in  it,  find  the  balance  weekly,  and  prove  the  totals  at  the 
end  of  the  month. 

Exercise  3.  Rule  paper  with  columns  the  same  as  in 
Exercise  2,  enter  the  following  transactions  in  it,  find  the 

BOOK 
25-30,  /£_ 


CLOTHING 

CAR  FARE 

AMUSE- 
MENTS 

EDUCA- 
TION 

HEALTH 

CHURCH 

AND 

BENEVO- 
LENCE 

MISCEL- 
LANEOUS 

SAVINGS 

8 

75 

/ 

60 

/ 

30 

/ 

20 

35 

30 

80 

3 



75 

50 

25 

to 

/5 

2 

75 

25 

7 

50 

50 

"77 

25 

2 

— 

75 

/ 

85 

/ 

55 

/ 

70 

75 

30 

/ 

W 

5 

= 

12     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

balance  weekly,  and  prove  the  totals  at  the  end  of  the 
month. 

March    1.   Balance  on  hand  from  February,  $4.25. 

Enter  this  in  the  Receipts  and  Balance  columns. 

2.  Paid  for  shoes,  $3. 

3.  Paid  for  car  fare,  25c. 

4.  Received  wages  for  the  week,  $8. 

4.   Paid  board  to  date,  $3 ;   paid  for  concert,  20c. 

7.   Paid  for  candy,  20c. 

9.   Paid  for  perfume,  25c ;   for  magazine,  25c. 

10.  Paid  for  drugs,  35c. 

11.  Paid  for  handkerchiefs,  50c;   for  car  fare,  25c. 
11.   Received  wages  for  the  week,  $8. 

11.  Paid  board  to  date,  $3. 

12.  Paid  for  church,  lOc. 

14.  Paid  for  toothbrush,  20c. 

15.  Deposited  in  savings  bank,  $2.50. 

16.  Paid  for  dress,  $3.95;   for  lunch,  20c. 

17.  Paid  for  gloves,  90c ;   for  lace,  40c. 

18.  Received  wages  for  the  week,  $8. 

18.  Paid  board  to  date,  $3 ;  paid  for  book,  $1. 

19.  Paid  for  car  fare,  50c. 

20.  Paid  for  shoe  polish,  25c ;   for  hose,  50c. 

21.  Paid  for  theater,  35c. 

22.  Paid  for  soap,  25c ;   for  talcum,  15c. 
25.  Received  wages  for  the  week,  $8. 

25.  Paid  board  to  date,  $3 ;  paid  for  concert,  25c. 

26.  Paid  for  church,  lOc. 

27.  Deposited  in  savings  bank,  $2 ;   paid  for  overshoes,  75c. 

28.  Received  for  addressing  envelopes,  $1.25. 
28.  Paid  for  ribbon,  30c. 

30.  Paid  for  theater,  50c ;  for  a  present  for  a  friend,  50c. 

31.  Paid  for  pins,  lOc;  for  needles,  lOc;  for  dental  work,  $2. 


PERSONAL  ACCOUNTS  SUMMARIZED  13 

QUESTIONS  FOR  DISCUSSION 

1.  Why  is  it  necessary  to  keep  personal  accounts? 

2.  What  effect  has  the  keeping  of  personal  accounts  on  habits  of 
saving  ? 

3.  Describe  the  use  of  the  two-column  cash  book. 

4.  How  often  should  expenditures  be  entered?     Why? 

5.  How  often  should  the  cash  book  be  balanced  ?     Explain  how  it 
is  done. 

6.  In  using  the  two-column  cash  book  how  can  one  find  the  amount 
expended  for  each  of  the  different  classes  of  expenditures  for  a  definite 
period,  as,  monthly  ? 

7.  What  are  the  advantages  of  the  special  column  cash  book  for 
personal  accounts? 

8.  How  is  the  special  column  cash  book  forwarded  during  the 
month  ?     How  is  the  balance  at  any  date  found  ? 

9.  How  often  should  the  cash  book  be  proved  with  the  cash  on 
hand  ?     How  is  it  done  ? 

10.  How  is  the  correctness  of  the  distribution  columns  proved  at 
the  end  of  the  month?  How  is  the  cash  book  forwarded  at  the  end 
of  the  month? 


CHAPTER  III 

ECONOMICS   OF  THE  HOUSEHOLD 

IN  the  study  of  personal  expenditures  little  was  said  about 
planning  the  expenditures  as  they  vary  so  greatly  with  the 
individual.  But  the  expenditures  of  the  household  must  be 
studied  and  planned  on  an  economic  basis.  Before  we  can 
keep  the  accounts  of  the  household  we  must  understand  the 
economic  conditions  in  the  modern  home. 

In  any  study  of  economics  there  are  two  chief  divisions : 
production  and  consumption.  Most  of  the  study  of  eco- 
nomics has  been  given  to  a  study  of  the  productive  side,  and 
little  attention  has  been  given  to  the  subject  of  consumption. 

Formerly  when  the  home  was  the  center  of  production 
as  well  as  of  consumption,  the  subject  of  consumption  was 
much  more  important  to  the  family  unit.  Now  that  the 
factory,  the  various  trades,  and  the  shops  have  taken  the 
burden  of  production  almost  entirely  from  the  family  circle, 
students  of  home  economics  are  turning  their  attention 
to  the  study  of  consumption. 

Most  of  the  wealth  acquired  outside  the  family  circle  is 
expended  either  on  the  home  or  on  interests  closely  related 
to  the  home.  For  women,  who  become  the  chief  directors  of 
the  expenditures  of  the  home,  the  study  of  consumption  is  of 
the  greatest  importance. 

With  the  increased  cost  of  living  and  the  knowledge  that 
there  is  a  great  deal  of  waste  in  the  consumption  of  food  and 

14 


ECONOMICS  OF  THE   HOUSEHOLD  15 

in  operating  the  home,  a  study  of  the  methods  of  obtaining 
greater  efficiency  in  the  home  is  necessary.  The  standard 
of  living,  the  efficiency  of  the  family,  can  be  increased  in 
three  ways:  by  increasing  the  income,  by  diminishing  the 
expenditures,  and  by  choosing  the  expenditures  more  wisely. 
Most  families  have  a  fairly  constant  income  that  cannot  be 
increased  to  any  great  extent  by  any  amount  of  effort. 
Since  there  is  little  hope,  in  the  average  family,  of  increasing 
the  income,  the  present  economic  pressure  forces  us  to  con- 
sider choosing  the  expenditures  more  wisely,  and,  if  possible, 
decreasing  the  expenditures. 

The  student  must  realize  the  importance  of  the  business 
side  of  the  home  and  that  it  is  only  by  training  the  house- 
keeper to  direct  and  plan  the  expenditures  that  the  stand- 
ard of  home  efficiency  can  be  increased.  The  housekeeper 
must  learn  from  the  business  world  that  to  expend  money  so 
as  to  get  the  maximum  of  benefit  from  the  expenditures, 
there  must  be  a  definite  plan,  a  classification  of  expenditures, 
and  an  apportioning  of  the  income  so  as  to  secure  the  maxi- 
mum of  efficiency. 

The  best  means  yet  found  of  apportioning  the  income  is 
by  means  of  the  family  budget.  A  budget  is  a  theoretical 
division  of  the  income  with  the  purpose  in  view  of  getting 
the  most  out  of  the  family  income.  It  is  a  plan  to  check 
undue  expenditure  in  any  direction.  It  gives  an  incentive 
to  bring  the  actual  expenditures  within  the  limits  of  the 
proportions  decided  upon. 

ENGEL'S  LAW.  The  basis  of  the  family  budget  is  a  study 
of  the  expenditures  of  a  number  of  families  with  varying  in- 
comes and  the  formation  of  a  number  of  principles  to  govern 
the  making  of  the  family  budget.  Dr.  Engel  first  made  a 
study  of  the  expenditures  of  the  families  of  working  men  in 


16      HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

Saxony.     The  results  of  his  study  he  expressed  in  four  laws 
known  as  Engel's  Laws.    They  are  as  follows : 

1.  As  the  income  of  a  family  increased,  a  smaller  percent- 
age was  expended  for  food.     For  example,  it  was  found  that 
with  an  income  of  $900,  about  35%,  or  $315,  was  expended 
for  food  for,  an  average  family.     But  with  an  income  of 
$2000,  only  25%,  or  $500,  was  expended  for  food. 

2.  As  the  income  increased,  the  percentage  spent  for  rent, 
fuel,  and  light  remained  invariably  the  same.     For  example, 
it  was  found  that,  with  an  income  of  $900,  the  percentage 
spent  for  rent  was  about  20%,  or  $180,  and  for  operating  ex- 
penses, 15%,  or  $135.     For  incomes  below  $800,  the  per- 
centage spent  for  rent  was  found  to  be  somewhat  lower, 
being  approximately  15%.     With  an  income  of  $2000  the 
percentage  spent  for  rent  was  approximately  the  same,  20%, 
or  $400,  and  for  operating  expenses  the  same,  15%,  or  $300. 

3.  With  every  increase  in  income,  the  percentage  spent  for 
clothing  was  approximately  the  same.     For  example,  the 
percentage  expended  for  clothing,  from  an  income  of  $900, 
was  found  to  be  between  15%  and  20%,  or  about  $135  to 
$180.     But  as  the  income  became  $1000  the  percentage  was 
approximately  the  same  for  incomes  up  to  $4000,  being  20%, 
or  $400,  for  an  income  of  $2000. 

4.  As  the  income  increased,  a  larger  proportion  was  spent 
for  education,  recreation,  and  the  other  expenditures  which 
pertain  to  the  higher  life.    For  example,  it  was  found  that  for 
incomes  under  $800,  few  families  could  spend  more  than  from 
5%  to  10%  for  the  higher  life.     But  with  incomes  of  $800  to 
$4000  the  per  cent  gradually  increased  from  10%  to  20%  or 
even  25%. 

These  figures  are  taken  chiefly  from  similar  investigations 
in  this  country  that  are  more  recent  than  those  of  Dr.  Engel. 


ECONOMICS   OF  THE   HOUSEHOLD  17 

Many  things  must  be  taken  into  consideration  in  fixing  the 
per  cent  to  be  expended  for  each  purpose.  It  has  been  found 
that  the  per  cent  depends  largely  upon  the  amount  of  the 
income  and  upon  the  standard  of  living  of  the  family.  The 
standard  of  living  is  influenced  by  many  things,  chief  of  which 
are  situation,  environment,  education,  occupation,  race, 
and  hereditary  tendencies.  One  thing  has  been  established, 
that  with  an  increase  in  education  there  is  usually  an  increase 
in  the  standard  of  living.  It  is  almost  self-evident,  also, 
that  the  per  cent  of  expenditures  for  shelter  and  clothing 
will  usually  be  higher  for  the  same  income  in  the  family  of 
a  professional  man  than  in  that  of  a  mechanic.  Yet,  in 
almost  every  family  whose  income  is  above  a  certain  mini- 
mum there  is  considerable  room  for  choice  in  the  matter  of 
expenditures. 

If  the  income  is  small,  almost  all  of  it  must  be  expended  for 
the  necessities  of  life.  After  the  income  reaches  a  certain 
minimum  ranging  from  $800  to  $1200  a  standard  of  living 
may  be  maintained  such  as  to  secure  a  reasonable  degree  of 
efficiency.  A  standard  of  living  to  accomplish  these  purposes 
includes  expenditures  under  the  following  classification : 

1.  The  necessaries  of  life,  including : 

a.  food 

b.  shelter 

c.  clothing 

d.  operating  expenses,  such  as,  fuel,  light,  wages  of  servants,  etc. 

2.  The  higher  life,  including  everything  that  ministers  to  the  mental 
and  moral  well-being,  classified  as  follows : 

a.  education,  books,  magazines,  and  self-improvement 

b.  recreation,  including  amusements,  travel,  dues  in  clubs  and 
lodges,  except  any  part  that  has  to  do  with  insurance  or  edu- 
cation 

c.  benevolence,  including  church  and  charities 


18     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 


d.  health,    including    expenditures    for    medicines,    physicians, 
nurses,  and  dentists 

e.  expenditures  for  household  furniture  and  furnishings 

/.   savings,  including  life  insurance,  investments,  real  property, 
etc. 

In  families  of  four  or  five  consisting  of  two  adults  and  two 
or  three  children  under  sixteen  years  of  age  or  in  families  of 
four  adults  investigations  in  this  country  have  shown  that  the 
expenditures  should  be  divided  up  about  as  follows : 


INCOME 

FOOD 

RENT 

OPERATING 
EXPENSES 

CLOTHING 

HIGHER 
LIFE 

Ideal    

25% 

20% 

15% 

1  ^  °7 

25% 

$1500-$4000    .     .     . 

25% 

20% 

15% 

20% 

20% 

$1000-$1500    .     .     . 

30% 

20% 

15% 

20% 

15% 

$800-11000      .    .     . 

35% 

20% 

15% 

15% 

15% 

$500-$800        .    .    . 

45% 

15% 

15% 

15% 

10% 

Under  $500      .     .     . 

60% 

15% 

10% 

10% 

5% 

This  estimate  for  varying  incomes  shows  a  close  following 
of  Engel's  law  already  explained.  It  will  be  noticed  that  the 
per  cent  expended  for  food  decreases  as  the  income  increases 
until  the  income  reaches  about  $1500,  then  the  per  cent 
remains  about  the  same,  that  of  the  ideal,  25%. 

Rent,  after  an  income  of  $800  is  reached,  maintains  a  con- 
stant per  cent,  20%. 

Operating  expenses  remain  practically  the  same  through- 
out, 15%. 

Expenditures  for  clothing  remain  about  the  same  in  in- 
comes from  $500  to  $1000,  about  15%;  after  that  maximum 
is  reached  the  per  cent  is  20%.  It  will  be  seen  that  the 
expenditure  for  clothing  is  5%  more  than  the  ideal.  Most 
families  will  probably  find  it  possible  to  reduce  the  expendi- 


ECONOMICS  OF  THE   HOUSEHOLD  19 

tures  for  clothing  to  about  17i%,  leaving  a  corresponding 
increase  for  the  higher  life. 

In  incomes  below  $800,  it  will  be  seen  that  the  per  cent 
expended  for  the  higher  life  can  be  very  small,  not  more  than 
from  5%  to  10%.  In  incomes  from  $800  to  $1500  the  per 
cent  increases  to  15%.  Above  that  amount  the  per  cent  re- 
mains about  20%. 

From  this  analysis  it  will  be  seen  that  about  the  only  way 
to  increase  the  per  cent  expended  for  the  higher  life  is  to  de- 
crease the  per  cent  expended  for  food  or  that  expended  for 
clothing,  as  the  other  factors  remain  practically  the  same 
throughout.  To  decrease  the  expenditure  for  food  is  possible, 
but  in  many  cases  not  practicable  if  the  efficiency  of  the 
family  is  to  be  maintained.  To  decrease  the  expenditure 
for  clothing  may  be  more  practicable. 

This  estimate  is  capable  of  still  further  subdivision,  de- 
pending upon  the  needs  of  individual  families.  The  ex- 
penditures for  food  may  be  divided  up  into  per  cents  for 
groceries,  meat,  milk,  etc.  The  expenditures  for  rent  should 
include  car  fare  to  and  from  the  place  of  employment.  The 
operating  expenses  may  be  divided  up  into  those  for  fuel, 
light,  service,  miscellaneous,  etc.  The  expenditures  for 
clothing  may  be  divided  into  per  cents  for  each  member  of 
the  family.  The  expenditures  for  the  higher  life  may  also 
be  divided  up  into  per  cents  for  education,  health,  insurance, 
savings,  etc. 

Exercise  4.  Divide  the  expenditures  of  Exercise  3  into  the 
divisions  and  subdivisions  given  on  pages  17  and  18  and  find 
what  per  cent  each  is  of  the  total  expenditures  for  the  month. 


CHAPTER  IV 

THE   FAMILY  BUDGET 

FROM  the  study  of  Engel's  law  we  have  seen  that,  in  order 
to  expend  the  family  income  wisely,  a  division  of  the  income 
should  be  made,  based  on  that  law  and  on  the  experience  of 
the  family.  This  estimate,  which  must  be  studied  and 
formulated  in  advance,  we  have  called  the  family  budget. 
Since  it  is  an  estimate,  it  will  at  first  be  quite  inaccurate 
and  subject  to  change,  unless  family  accounts  have  pre- 
viously been  kept  which  will  show  the  departures  from  the 
law  necessary  in  this  case.  The  management  of  the  modern 
home  is  a  business  proposition.  No  business,  no  club  or 
society,  no  church  or  lodge  would  think  of  beginning  a  new 
year  without  some  study  of  the  expenses  that  must  be  met 
during  the  year.  But  that  is  not  sufficient  in  most  cases. 
There  must  be  a  working  out  of  some  definite  plan  for  the 
expenditures  for  the  year,  and  this  must  be  put  into  a 
working  table  that  can  be  used  as  a  guide.  This  is  the 
object  of  the  family  budget.  It  is  not  an  experiment ;  it  has 
become  as  necessary  as  the  club  or  society  budget  or  the 
municipal  budget. 

But  how  shall  we  go  about  the  making  of  the  family  budget? 
Let  us  make  a  study  of  the  method  employed  by  a  family  of 
about  the  average  size.  We  shall  take,  for  this  purpose,  the 
family  of  Charles  Green,  consisting  of  Mr.  Green,  his  wife, 

20 


THE   FAMILY  BUDGET  21 

Helen,  his  son,  Frank,  aged  14,  and  his  daughter,  Grace, 
aged  11. 

Mr.  Green  is  a  machinist  earning  $3.50  a  day  for  an  aver- 
age of  300  days  in  the  year,  or  $1050.  Frank  earns  an  aver- 
age of  75c  a  week  selling  papers,  or  $39.  Mrs.  Green  earns 
a  few  dollars  baking  for  some  of  her  friends,  bringing  the 
family  income  up  to  approximately  $1100. 

Before  beginning  a  new  year,  Mr.  and  Mrs.  Green  and  the 
children  spend  an  evening  talking  over  the  expenditures  for 
the  coming  year.  The  children  are  given  a  general  idea  of 
the  plan  and  in  this  way  are  being  trained  to  help  solve  the 
problems  of  the  family  as  they  become  older.  Mr.  and  Mrs. 
Green  have  both  made  a  careful  study  of  Engel's  law  and 
have  read  several  articles  on  the  method  of  making  the 
family  budget.  Mrs.  Green  has,  during  the  past  year,  kept 
some  simple  accounts  that  will  aid  very  much  in  making  the 
budget.  Each  member  of  the  family  is  given  pencil  and 
paper.  They  begin  the  study  of  the  necessaries  under  the 
heads  of  food,  shelter,  clothing,  and  operating  expenses. 

The  question  of  rent  is  first  taken  up,  as  that  is  a  fairly 
constant  quantity.  The  family  lives  in  a  flat  for  which  they 
pay  $16  a  month,  or  $192  a  year.  Mr.  Green  lives  at  some 
distance  from  his  work  which  necessitates  an  expenditure  of 
8c  a  day  for  car  fare,  or  about  $24  a  year.  It  is  proper  to 
charge  this  car  fare  to  shelter  and  to  include  it  in  with  the 
rent.  Other  expenditures  for  car  fare  should  be  charged  to 
amusements,  or  clothing,  or  to  whatever  item  caused  the 
expenditure  for  car  fare.  A  separate  division  may  be  kept 
for  car  fare  but  it  can  properly  be  kept  in  this  way.  The 
total  cost  of  rent  and  car  fare  they  estimate  to  be  $216. 
They  consult  the  ideal  division  of  20%  for  rent  and  find 
that  their  estimate  is  just  within  that  ideal  estimate  of  $220. 


22      HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

The  question  of  the  expenditure  for  food  is  then  consid- 
ered. By  taking  25%  of  the  income  as  the  ideal  division 
for  food,  they  find  it  to  be  $275.  This  they  divide  by  12,  in 
order  to  get  the  estimate  per  month.  This  division  gives  a 
fraction  less  than  $23  a  month.  In  order  to  make  the  divi- 
sion equal,  they  take  $23  as  the  estimate  per  month,  or  $276 
per  year.  Mrs.  Green  has  kept  some  accounts  and  has  di- 
vided her  expenditures  for  food  into  three  divisions :  milk 
and  butter,  meat,  groceries  and  vegetables.  From  past 
experience  she  estimates  that  the  expenditures  for  milk  and 
butter  will  be  $3.50  per  month.  The  average  expenditures 
for  meat  have  been  between  seven  and  eight  dollars.  This 
seems  high  to  Mrs.  Green,  but  Mr.  Green's  work  is  strenuous 
manual  labor  and  they  decide  that  it  is  unwise  to  cut  down 
the  allowance  for  meat.  They  fix  the  average  amount  at 
$7.50.  Taking  the  sum  of  these  two  from  $23  leaves  $12 
for  groceries  and  vegetables.  This  Mrs.  Green  considers 
sufficient.  She  does  not  include  in  this,  however,  expendi- 
tures for  soap,  washing  powders,  cleaning  powders,  and  other 
expenditures  of  a  similar  nature  that  pertain  to  running  the 
home. 

The  question  of  operating  expenses  is  next  taken  up.  They 
divide  this  up  into  expenditures  for  fuel,  light,  washing  and 
cleaning,  and  miscellaneous.  They  expended  the  previous 
year  for  coal  and  coke  for  fuel,  $35,  but  the  winter  was  mild, 
so  they  decide  to  add  $7  to  this,  making  an  allowance  of  $42. 
For  gas  for  fuel  and  light,  their  average  expenditure  is  $2.50 
per  month,  or  $30  per  year.  Mrs.  Green  does  her  own  wash- 
ing with  the  help  of  the  children,  but  occasionally  has  help 
in  cleaning  and  in  housecleaning.  She  estimates  that  her 
expenditures  for  washing  supplies  and  for  extra  help  amount 
to  $18  per  year.  The  sum  of  these  three  makes  $90,  leaving 


THE   FAMILY  BUDGET  23 

$75  for  miscellaneous  operating  expenses,  on  the  basis  of  15% 
of  $1100,  or  $165.  This  amount  is  considered  sufficient  for 
all  other  operating  expenses. 

The  question  of  clothing  is  next  considered.  Each  mem- 
ber of  the  family,  with  the  aid  of  the  others,  makes  a  list 
of  what  will  be  needed  for  the  coming  year.  They  talk 
over  these  lists  and  finally  present  totals  as  follows :  Mr. 
Green,  $60;  Mrs.  Green,  $70;  Frank,  $25;  Grace,  $25. 
This  made  a  total  of  $180.  15%  of  $1100  is  $165.  Their 
estimate  is  thus  $15  more  than  the  ideal  amount.  Since 
practically  all  the  members  of  the  family  need  suits  and  coats 
this  year  they  decide  that  $180  is  the  least  amount  they  can 
consider  for  the  next  year.  They  agree,  however,  to  plan 
so  that  the  expensive  things  will  not  have  to  be  purchased 
for  each  member  of  the  family  in  the  same  year. 

This'leaves  $263,  or  23ji%  for  expenditures  for  the  higher 
life.  They  take  up,  with  great  interest,  the  expenditures  for 
the  higher  life.  They  decide  after  much  thought,  to  make 
the  following  divisions :  education,  recreation,  benevolence, 
health,  household  furniture  and  furnishings,  life  insurance, 
and  savings. 

They  consider  first  the  life  insurance  as  that  is  a  constant 
amount.  Mr.  Green  has  his  life  insured  for  $2000  in  a  legal 
reserve  insurance  company  at  an  annual  premium  of  $52.50, 
payable  semiannually.  Under  education  they  estimate  that 
school  books  for  the  children  and  magazines  for  the  family 
will  cost  $12.  Mr.  Green  desires  to  buy  a  set  of  books  on 
mechanics  to  enable  him  to  improve  his  knowledge  and  skill. 
These  will  cost  $20.  Mrs.  Green  desires  to  purchase  three 
books  on  cooking,  dietetics,  and  home  management  at  a 
cost  of  $5.  Their  amusements  consist  of  an  occasional  con- 
cert, a  good  photoplay  once  a  week  for  the  family,  and  oc- 


24     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

casional  trips  to  the  parks  of  the  city.  These  they  estimate 
will  amount  to  $30.  For  church  and  dues  to  the  union 
they  estimate  that  $18  will  be  needed.  Expenditures  for 
health,  including  medicines,  physicians'  and  dentists'  bills, 
they  estimate  to  be  $25.  For  the  household  they  estimate 
that  they  need  a  new  rug  for  the  living  room,  a  new  chair, 
and  some  new  linen  for  the  table  and  beds.  These  they 
estimate  will  cost  about  $35. 

Frank,  who  is  good  at  figures,  quickly  sums  up  the  total 
of  the  estimates  and  finds  that  only  $65.50  remains  to  be  put 
into  a  savings  fund.  This  seems  like  a  small  amount,  but 
they  remember  that  the  allowance  for  life  insurance  of  $52.50 
is  really  a  saving  in  another  and  even  better  form  than  a 
savings  account  in  the  bank.  Frank  then  tabulates  the  al- 
lowances in  such  a  form  that  they  can  easily  be  inspected  and 
makes  a  copy  for  each  member  of  the  family.  This  tabula- 
tion will  be  given  in  the  next  chapter. 

Exercise  5.  The  family  of  Mr.  Charles  Green,  whose 
budget  has  been  studied  in  this  chapter,  has  had  its  income 
increased,  as  Mr.  Green  has  been  made  foreman  at  a  salary 
of  $115  a  month.  Frank  now  earns  $1.50  per  week  selling 
papers  and  running  errands.  Find  the  amount  to  be  ex- 
pended for  each  of  the  different  divisions  given  in  this  chapter 
based  on  the  ideal  budget  division. 

Exercise  6.  a.  Suppose  that  Mrs.  Green  is  given  an 
allowance  of  $70  for  clothing,  as  outlined  in  the  budget. 
Make  a  list  of  the  articles  that  might  be  purchased 
by  Mrs.  Green  for  that  amount,  giving  the  price  of  each 
article. 

b.  Suppose  that  you  were  given  an  allowance  of  $30  for 
clothing  for  a  year,  make  a  list  of  the  articles,  with  their 
prices,  that  you  would  buy. 


THE   FAMILY  BUDGET  25 

Exercise  7.  Suppose  that  you  were  given  an  allowance 
of  $32  a  month  for  food  for  a  family  of  four  adults,  make  a 
list  of  the  articles  for  which  you  would  spend  the  allowance. 
Use  local  prices  and  show  the  amount  to  be  expended  for 
each  article  of  food. 

Exercise  8.  With  the  allowance  of  $32  for  the  family  of 
four  adults  as  given  in  Exercise  7,  make  menus  for  a  month. 
Give  the  cost  of  each. 


CHAPTER  V 
THE  FAMILY  BUDGET  TABULATED 

THE  budget  of  the  Charles  Green  family  as  worked  out  in 
the  last  chapter  is  given  in  tabular  form  on  page  27. 

In  the  study  of  Engel's  law  as  applied  to  the  family  budget 
it  must  be  understood  that  it  is  simply  a  basis  for  making 
estimates.  It  cannot  be  followed  exactly  in  very  many 
families,  but  in  most  families  with  an  income  of  at  least  $800 
or  $900  it  can  be  closely  approached.  In  some  localities, 
especially  in  the  large  cities  of  the  extreme  east  and  the  west, 
the  allowance  for  food  and  for  rent  is  not  large  enough  to 
cover  the  necessary  expenses.  Where  the  family  consists 
of  the  parents  and  two  or  more  children  over  fourteen  years 
of  age  the  allowance  for  clothing  may  not  be  sufficient.  In 
cases  of  unusual  sickness  especially  at  the  birth  of  children, 
the  allowance  for  "  Health  "  will  not  be  sufficient.  All  of 
these  conditions  show  that  the  family  budget  cannot  properly 
be  made  out  without  a  study  not  only  of  the  ideal  budget 
but  also  by  a  careful  study  of  the  expenditures  of  the  indi- 
vidual home  and  the  keeping  of  proper  accounts  to  give  the 
necessary  information. 

Mr.  and  Mrs.  Green  believe  in  sharing  the  responsibility 
for  the  expenditures  based  on  the  budget.  Mr.  Green  re- 
ceives his  wages  twice  a  month,  which,  with  the  earnings  of 
the  rest  of  the  family,  makes  an  average  for  the  semimonthly 
receipts  of  $45.84.  Mr.  Green  assumes  responsibility  for 

26 


THE   FAMILY  BUDGET 


27 


BUDGET  OF  THE  CHARLES  GREEN  FAMILY  FOR  19 — 

PER  YEAR 


Food 

Milk  and  Butter 
Meat  7.50 

Groceries  and  Vegetables       12.00 


PER  MONTH 

$23.00 
$3.50 


$42.00 

90.00 

144.00 


$276.00 


Rent  and  Car  Fare 
Rent 
Car  Fare 


16.00 
2.00 


18.00 


192.00 
24.00 


216.00 


Operating  Expenses 

Fuel  for  Heating  3.50 

Gas  2.50 

Washing  and  Cleaning  1.50 

Miscellaneous  6.25 


13.75 


42.00 
30.00 
18.00 
75.00 


165.00 


Clothing 
Mr.  Green 
Mrs.  Green 
Frank 
Grace 


5.00 
5.83 
2.08 
2.09 


15.00 


60.00 
70.00 
25.00 
25.00 


180.00 


Higher  Life 
Books  and  Magazines 
Recreation 

Church  and  Benevolence 
Health 
House     Furniture     and 

Furnishings 
Life  Insurance 
Savings 


21.92 


263.00 


3.08 
2.50 
1.50 
2.08 

2.92 
4.38 
5.46 


37.00 
30.00 
18.00 
25.00 

35.00 
52.50 
65.50 


$91.67 


$1100.00 


28     HOUSEHOLD   ACCOUNTING  AND   ECONOMICS 

the  rent  and  his  car  fare,  the  fuel  for  heating,  his  clothing, 
his  life  insurance,  the  payment  of  his  books,  and  the  savings 
deposit,  amounting  in  all  to  $19  semimonthly.  At  each 
payment,  Mr.  Green  puts  aside  $9  for  rent  and  car  fare, 
83c  for  the  payment  on  his  books,  SI. 75  for  fuel,  uses  what  is 
necessary  for  his  clothing  and  puts  the  balance  of  his  allow- 
ance for  clothing  together  with  $2.19  for  life  insurance  in  a 
savings  fund  to  be  used  for  the  different  purposes  when  needed. 
In  another  savings  fund  he  deposits  $2.73  semimonthly  for 
the  estimated  savings  according  to  the  budget.  The  balance 
of  the  semi-monthly  income,  $26.84,  is  given  to  Mrs.  Green. 
Of  this,  Frank  is  given  an  allowance  of  40c  and  Grace  of  30c. 
They  are  required  to  meet  certain  small  expenditures  out  of 
this  allowance  and  to  keep  an  accurate  account  of  all  expendi- 
tures. Mrs.  Green  pays  the  current  expenses  for  food,  oper- 
ating expenses,  except  that  for  fuel  for  heating,  buys  the 
necessary  clothing  for  herself  and  children,  makes  the  ex- 
penditures for  books  and  magazines,  recreation,  church  and 
benevolence,  and  health  and  puts  the  balance  in  a  savings 
account  to  be  used  for  the  larger  expenditures  for  clothing, 
house  furnishings,  etc. 

One  cannot  help  but  see  that  in  the  study  of  the  family 
budget  careful  thought  is  given  to  the  planning  and  carrying 
out  of  the  plans  formulated,  one  of  the  chief  objects  of  the 
family  budget.  Another  object  of  the  family  budget,  that 
of  aiding  in  making  the  expenditures  and  keeping  an  account 
of  them,  will  be  discussed  in  the  next  chapter. 

Exercise  9.  The  family  of  George  Jones  consists  of  Mr. 
Jones,  his  wife,  Mary,  a  son,  Fred,  aged  16,  and  a  daughter, 
Louise,  aged  14.  Mr.  Jones  is  a  bookkeeper  and  earns  $125 
a  month.  Fred  earns  $5  a  month  selling  papers.  Mrs. 
Jones  pays  a  woman  $1.50  every  other  week  for  washing  and 


THE   FAMILY  BUDGET 


29 


cleaning.  Mr.  Jones  rides  to  work  in  the  street  car,  which 
costs  him  8c  a  day.  He  carries  $2500  life  insurance,  which 
costs  him  $67.86  per  year.  Make  a  family  budget  in  tabu- 
lar form  both  by  the  month  and  by  the  year. 

Exercise  10.  The  family  of  James  Baker  consists  of  Mr. 
Baker,  his  wife,  Ellen,  and  two  boys,  Roy,  aged  5  years,  and 
Francis,  aged  3  years.  Mrs.  Baker's  mother  also  lives  with 
them.  Mr.  Baker  is  a  carpenter  and  earns  an  average  of 
$3.75  a  day  for  25  days  a  month  from  April  to  November 
inclusive.  From  December  to  March  inclusive  he  earns  $3.60 
a  day  for  an  average  of  18  days  a  month.  Mrs.  Baker,  with 
the  aid  of  her  mother  does  all  of  her  work.  Mr.  Baker 
has  a  bicycle  and  rides  to  and  from  his  work  on  it.  His 
expenses  for  up-keep  on  his  bicycle  have  not  been  greater 
than  $3  yearly.  Mr.  Baker  pays  annual  dues  in  his  union 
amounting  to  $6  and  belongs  to  a  fraternal  insurance  lodge 
to  which  he  pays  $2.15  monthly.  Mr.  and  Mrs.  Baker  are 
buying  their  home,  on  which  they  make  monthly  payments  of 
$18.  They  also  owe  a  doctor's  bill  of  $25  for  services  the 
past  year,  which  must  be  provided  for  in  this  year's  budget. 
Make  a  family  budget  in  tabular  form  both  by  the  month  and 
by  the  year. 

Exercise  11.  Mrs.  Graham  has  a  monthly  allowance  for 
food  of  $36.  The  family  consists  of  Mr.  Graham,  a  lawyer, 
Mrs.  Graham,  a  daughter,  aged  17,  in  the  third  year  of  high 
school,  and  a  son,  aged  15,  in  the  first  year  of  high  school. 
Divide  this  allowance  providing  for  the  different  kinds  of 
food,  and  draw  up  a  list  of  the  quantity  of  food  and  cost  of 
the  different  items  of  food  under  each  division.  If  the 
teacher  desires,  menus  may  be  prepared  based  on  this  allow- 
ance of  $36  and  the  cost  of  each  menu  worked  out  at  local 
prices. 


30     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

QUESTIONS  FOR  DISCUSSION 

1.  What  changes  have  taken  place  in  the  economic  conditions  in 
the  home  ? 

2.  What  branch  of  economics  should  be  studied  by  the  housekeeper 
most  thoroughly,  and  why  ? 

3.  In  what  three  ways  may  the  efficiency  of  the  family  be  increased  ? 

4.  Of  the  three  ways  given  for  increasing  the  efficiency  of  the 
family,  which  is  the  most  practicable  under  ordinary  conditions  ?     Why  ? 

5.  Give  Engel's  law  and  explain  each  part  of  it. 

6.  Of  what  value  is  Engel's  law  to  the  housekeeper?     Explain. 

7.  Classify  the  expenditures  for  the  necessaries  of  life  and  tell  what 
each  includes. 

8.  Classify  the  expenditures  for  the  higher  life  and  tell  what  each 
includes. 

9.  What  is  meant  by  a  family  budget? 

10.  Give  the  ideal  division  of  the  expenditures  of  the  family  budget. 

11.  Explain  how  to  go  about  the  making  of  a  family  budget. 

12.  Of  what  value  is  the  family  budget  in  planning  the  expenditures  ? 

13.  Give  any  objections  to  the  making  of  a  family  budget  that  you 
can  think  of. 

14.  Do  you  think  it  is  possible  for  a  girl  earning  $10  a  week  and  pay- 
ing for  her  board  and  room  to  keep  her  expenditures  for  the  different 
divisions  within  the  limits  of  the  ideal  division  for  a  family?     Give 
reasons  for  your  answer. 

15.  Name  the  principal  elements  that  affect  the  standard  of  living 
of  a  family. 


CHAPTER  VI 

HOW  TO   KEEP   THE   FAMILY  ACCOUNTS 

THE  study  of  the  family  budget  is  a  study  of  the  ideal,  the 
keeping  of  accounts  is  a  study  of  the  real.  The  making 
of  the  family  budget  is  an  estimate,  a  prophecy ;  the  keeping 
of  accounts  is  history.  The  family  budget  aids  in  keeping 
the  accounts,  the  keeping  of  accounts  this  year  aids  in  making 
next  year's  budget. 

As  the  family  budget  should  be  a  joint  affair  in  which  all 
members  of  the  family  that  are  old  enough  take  a  part,  so  the 
cooperation  of  the  whole  family  should  be  enlisted  in  order 
to  make  the  keeping  of  family  accounts  a  success.  The  house- 
keeper, as  manager  of  the  home,  knows  more  about  the  ex- 
penditures of  the  family  than  any  other  member,  so  naturally 
becomes  the  bookkeeper.  It  is  very  desirable,  however, 
that  the  housekeeper  train  the  children,  especially  the  girls 
of  the  family,  to  aid  in  keeping  these  accounts.  At  first  they 
can  be  given  simply  the  mathematical  work  of  proving  up 
the  accounts  and  as  they  become  older  they  may  be  taught 
to  make  the  entries.  No  one  should  be  frightened  by  the 
word  bookkeeper,  as  the  housekeeper  need  have  no  knowledge 
of  bookkeeping  as  such  in  order  to  keep  the  proper  records  of 
the  home  expenditures.  No  elaborate  system  nor  one  that 
involves  a  great  deal  of  work  should  be  undertaken  because 
it  is  sure  to  result  in  failure.  The  housekeeper  has  little  time 
to  give  to  this  work  and  in  many  cases  little  inclination  to  do 

31 


32      HOUSEHOLD  ACCOUNTING   AND   ECONOMICS 

it.  The  method  must,  therefore,  be  simple,  capable  of  being 
expanded  and  changed  as  new  conditions  arise,  must  require 
little  time,  and  must  be  easily  proved.  Once  a  method  is 
understood,  the  three  essentials  of  properly  keeping  family 
accounts  are :  first,  the  entries  must  be  made  daily  as  they 
occur ;  second,  the  balance  of  cash  on  hand  must  be  proved 
with  the  actual  cash  on  hand  or  in  the  bank  often;  third, 
accuracy  in  entering  and  computing  the  totals  monthly  and 
proving  them  up  is  of  the  utmost  importance. 

Bookkeepers  in  business  houses  make  entries  of  the  trans- 
actions that  occur  in  certain  books  of  entry  called,  accord- 
ing to  their  purpose,  cash  book,  sales  book,  purchase  book, 
journal,  etc.  They  then  transfer  these  items  from  the  books 
of  entry  to  a  book  in  which  all  the  items  are  classified,  called 
a  ledger.  The  same  method  may  be  followed  by  the  house- 
keeper in  keeping  the  family  accounts  but  this  requires  more 
time  than  the  average  housekeeper  can  give  to  this  work  and 
demands  more  technical  knowledge  than  the  average  house- 
keeper has.  Reference  to  the  two-column  cash  book  in 
Chapter  I,  with  the  following  illustration,  will  make  this 
method  clear.  Suppose  that  a  payment  of  $25  was  made  for 
rent.  It  would  be  entered  on  the  right-hand  side  of  the  two- 
page  cash  book  or  in  the  right-hand  column  of  a  two-column 
cash  book  as  follows  :  Rent  To  August  1  $25.00.  This 
would  then  be  transferred  to  a  place  in  the  ledger  headed 
Rent.  Every  other  payment  for  rent  would  be  entered  in  a 
similar  way  in  the  cash  book  and  then  transferred  to  the 
Rent  account  in  the  ledger.  In  a  similar  way,  every  other 
payment  would  be  named  under  some  particular  heading  cor- 
responding to  similar  headings  in  the  budget  and  then  trans- 
ferred to  that  heading  or  account  in  the  ledger.  This 
involves  a  great  deal  of  work  and  is  not  necessary,  as  the 


HOW  TO  KEEP  THE   FAMILY  ACCOUNTS          33 

leadings  or  accounts  of  the  household  are  comparatively  few 
number  and  do  not  change  to  any  extent  from  month  to 

lonth. 

When  the  method  of  keeping  personal  accounts  is  under- 
stood, as  given  in  Chapter  II,  by  the  use  of  the  cash  book  with 
distributive  columns,  it  is  only  a  step  farther  to  the  keeping 
of  family  accounts.  By  having  special  columns  to  corre- 
spond to  the  principal  divisions  of  the  budget,  the  cash  book 
becomes  a  cash  book  and  ledger  combined.  This  makes  it 
possible  to  see  at  a  glance  what  the  expenditures  for  the 
month  were  and  how  they  were  distributed.  With  this 
form  it  is  possible  also  to  prove  the  cash  often  and  to  prove 
the  accuracy  of  the  distribution  monthly. 

The  cash  book  is,  of  course,  the  most  important  book  of 
entry.  Nothing  should  be  entered  in  it  but  cash  actually 
received  and  paid  out.  It  is  a  mistake  for  the  housekeeper 
to  try  to  combine  with  the  payments  of  cash,  items  that 
represent  purchases  made  on  account.  They  should  not 
be  entered  in  the  cash  book  till  the  payments  are  actually 
made.  Purchases  on  account,  unless  for  articles  that  are  ex- 
pensive and  that  are  bought  on  installments,  should  be  paid 
monthly.  If  these  bills  are  paid  after  the  end  of  the 
month,  the  cash  book  should  be  held  open  for  a  few  days 
after  the  beginning  of  the  month  so  that  the  payments  may 
be  entered  in  the  month  to  which  the  expenditures  belong 
instead  of  in  the  month  in  which  they  are  paid.  For  ex- 
ample, suppose  the  family  pays  its  meat  bill  monthly,  and 
that  the  payment  is  made  on  Sept.  3  for  the  August  bill. 
It  should  be  entered  in  the  August  cash  book  on  the  last 
day  of  the  month  with  the  date  of  payment  shown  in  the 
explanation. 

Since  it  has  been  firmly  established  by  all  experienced  home 


34     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 


DATE 

RE- 
CEIPTS 

ITEMS 

BAL- 
ANCE 

TOTAL 
PAY- 
MENTS 

FOOD 

RENT 

AND 

CAB 
FARE 

FUEL 

AND 

LIGHT 

June 

91\67 

Budget  Line 

91 

67 

23 

— 

18\- 

6 

— 

June\   1 

34 

86 

Balance 

34 

U 

1 

Rent 

16 



16 



2 

Carfare  i.oo  Book  -15 

1 

15 

1 



3 

Meat  -30  Vegetables  .so 

50 

•10 

4 

Groceries,  Nord  bill 

4 

35 

4 

35 

5 

Soap  -25  Cleaning  i-oo 

1 

25 

6 

Medicine-ss  Concert-M 

65 

? 

Repairs  to  stove  s.%5 

Meat  bill  2-15 

4 

40 

9 

15 

7 

Butter  -87  Ties  -50 

4 

58 

l 

37 

87 

8 

Church  -%5  Carfare 

to  park  -35 

60 

11 

Fruit  -30  Vegetables  .so 

50 

50 

1% 

Tooth  paste  .so 

Dentist  l.oo 

1 

20 

IS 

Dress  goods*  .soLaee-M 

1 

70 

14 

47 



Wages,  Mr.  G.  M.so 

Frank  i.so 

47 

58 

15 

Church  -30  Concert  -to 

70 

17 

Car  fare  i-oo 

Books,  Mr.  G.  2-00 

3 



1 

— 

19 

Gas  z-15  Linen  1-98 

4 

13 

2 

15 

20 

Life  Ins.  deposit  k-38 

Theater  .Uo 

4 

78 

21 

Meat  bill  3.  7  5   Grocer- 

ies per  Hume  bill  5.60 

25 

62 

9 

35 

9 

35 

22 

Church  .40  Stamps  .so 

60 

24 

Dress,  Grace  3-W 

3 

48 

25 

Butter  GO  Soap  -S5 

85 

60 

27 

Stationery  ./»0 

40 

28 

43 

50 

Wages,  Mr.  G.  W,oo 

Frank  l.so 

28 

Picnic  -75 

Hat,  Mr.  G.  1.25 

2 



28 

Savings  deposit  5M 

Sheets  .80 

55 

53 

6 

26 

30 

Meat  bill  i.so  Butter  -so 

1 

50 

1 

50 

30 

Newspaper  -%5 

Suit,  Frank    10.00 

Milk  1.50 

11 

75 

1 

50 

124 

75 

42 

88 

O& 

47\ 

21 

32 

18 

— 

2 

15 

HOW   TO   KEEP   THE   FAMILY  ACCOUNTS 


35 


WASH- 
ING AND 
CLEAN- 
ING 

MIS- 
CELLA- 
NEOUS 
EX- 
PENSES 

CLOTH- 
ING 

BOOKS 

AND 

MAGA- 
ZINES 

RECRE- 
ATION 

CHURCH 

AND 

BENEV- 
OLENCE 

HEALTH 

FURNI- 
TURE 

AND 

FUR- 
NISH- 
INGS 

LIFE 
INSUR- 
ANCE 

SAV- 
INGS 

1 

56 

6\25 

15 

— 

S\08 

2\50 

7N 

2\08 

2\92 

4\38 

5\4G 

1 

>rt 

u 

40 

25 

2 

,  (') 

50 

35 

25 

1 

20 

1 

70 

2 

— 

1 

W 

40 

4 

38 

10 

40 

25 

40 

S 

48 

1 

25 

75 

80 

5 

46 

j 

50 

2 

8. 

16 

9, 

2 

41 

2 

Si 

95 

l\45 

& 

7< 

4 

38 

5 

46 

36     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

managers  that  purchases  of  food,  the  ordinary  operating  ex- 
penses of  the  home,  and  articles  of  clothing  with  the  possible 
exception  of  expensive  articles,  should  be  paid  at  least 
monthly  if  they  are  bought  on  account,  they  can  be  entered 
when  paid  in  the  manner  just  given.  All  articles  purchased 
on  account  should  be  accompanied  by  a  bill.  These  bills 
should  be  preserved  in  some  convenient  way  to  be  explained 
later.  At  the  end  of  the  month,  these  bills  should  be  com- 
pared with  the  statement  of  account,  if  one  is  rendered,  and 
the  computations  verified.  If  no  statement  of  account  is  ren- 
dered, as  is  usual  in  the  case  of  meat  and  grocery  bills,  the 
accuracy  of  the  bills  should  be  ascertained  before  the  bills 
are  paid.  If  grocery,  meat,  or  milk  bills  are  paid  monthly 
or  semimonthly,  the  items  need  not  be  entered  in  the  cash 
book.  All  that  is  necessary  is  to  name  the  firm  to  which  the 
bill  is  paid  in  the  explanation.  As,  Meat,  per  Gordon  bill, 
$7.50.  But  if  articles  of  clothing,  dry  goods,  house  furnish- 
ings, etc.  are  bought  and  paid  for  monthly,  they  should  be 
itemized  in  the  cash  book.  Small  items  that  cost  little 
may  be  lumped  together  under  the  head  of  Notions  or  some 
similar  heading. 

In  addition  to  the  cash  book,  a  book  should  be  kept,  or  it 
may  be  several  pages  of  the  same  book  with  the  ordinary 
two-column  ruling,  in  which  a  record  of  all  purchases  that  are 
not  settled  monthly  are  kept  and  any  contracts  important 
enough  to  demand  a  record.  This  book  takes  the  place  of 
the  journal  or  day  book  of  the  bookkeeper,  but  need  not  be 
kept  so  formally  as  the  bookkeeper  keeps  it.  The  method 
of  handling  accounts  of  this  kind,  including  installment  ac- 
counts, will  be  explained  later. 

Study  the  cash  book  on  pages  34  and  35  and  its  relation 
to  the  family  budget.  The  idea  of  the  budget  for  the  Green 


HOW  TO   KEEP  THE   FAMILY  ACCOUNTS          37 

family,  as  worked  out  in  the  last  two  chapters  is  continued  in 
the  cash  book  illustrated  here.  A  series  of  transactions  is 
given  illustrating  the  receipts  and  expenditures  of  the  Green 
family  for  a  month. 

In  this  cash  book  the  budget  allowance  is  placed  at  the 
head  of  each  column  just  under  the  name  of  the  column. 
This  serves  as  a  guide  to  the  expenditures  under  each  heading. 
By  comparing  this  cash  book  with  the  cash  book  with  dis- 
tributive columns  on  pages  10  and  11  the  student  will  easily 
understand  how  this  family  cash  book  is  kept. 

Exercise  12.  Use  the  loose-leaf  sheets  ruled  like  the  cash 
book  in  this  chapter  or  rule  sheets  and  enter  the  following 
transactions.  The  transactions  are  represented  to  be  those 
of  the  D.  E.  Willis  family.  The  family  consists  of  Mr.  Willis, 
a  salesman,  his  wife,  and  two  daughters,  Mabel  and  Clara. 
Mr.  Willis  receives  $125  per  month.  Their  family  budget 
is  as  follows : 

MONTHLY 

Food  $31.25 

Rent  and  Car  Fare  24.00 

Operating  Expenses  18.75 

Fuel  and  Gas  $7.50 

Washing  and  Cleaning  5.00 

Miscellaneous  6.25 

Clothing  20.00 

Higher  Life  31.00 

Books  and  Magazines  2.75 

Recreation  2.25 

Church  and  Benevolence  2.00 

Health  3.00 

House  Furniture  and  Furnishings      5.00 

Life  Insurance  7.00 

Savings  9.00 

$125.00 


38      HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

September    1.  Balance  on  hand,  $16.25. 

1.  Received  salary,  $125. 

1.  Paid  rent  to  Oct.  1,  $22. 

2.  Paid  for  car  tickets,  $1 ;   dry  groceries,  $6.75 ;   soap, 

50c. 

3.  Paid  for  2  T.  coke,  $13.50;  washing,  $1. 

4.  Paid  for  fruit  and  vegetables,  60c ;   meat  bill,  80c. 

4.  Deposited  in  savings  fund,  $9,  and  in  life  insurance 

savings  fund,  $7. 

5.  Paid  for  church,  50c. 

6.  Paid  for  picnic  and  car  fare  to  it,  $1.15 ;  butter,  60c. 

8.  Paid  for  school  books,  $3.65;  kitchen  utensils,  85c. 

9.  Paid  for  fruit  and  vegetables,  45c ;  medicine,  40c. 

10.  Paid  for  one  pair  of  curtains,  $3.75 ;  magazine,  15c ; 

washing  and  cleaning,  $1.25. 

11.  Paid  for  fruit  and  vegetables,  7(5c;     theater,   60c; 

meat  bill,  $2.20. 

12.  Paid  for  church,  40c ;  car  fare  to  park,  25c. 

14.  Paid  gas  bill,  $1.45;    electric  light  bill,  $1.20;    car 

tickets,  $1. 

15.  Paid  for  fruit  and  vegetables,  45c ;  butter  60c. 

Find  the  cash  balance  on  the  4th,  llth,  and  15th. 


CHAPTER  VII 

UNEXPENDED  BALANCES 

IN  studying  the  family  budget  we  found  that  the  estimated 
allowance  for  certain  expenses  was  more  than  enough  for 
some  months  and  not  enough  for  others.  The  same  thing 
can  be  seen  by  studying  the  cash  book  on  pages  34  and  35. 
This  condition  gives  an  unexpended  balance  to  be  carried  over 
to  the  next  month  or,  in  a  few  cases,  an  amount  over  paid  to 
be  taken  care  of  the  next  month.  The  housewife  should 
have  a  table  of  these  unexpended  balances  before  her  at  the 
beginning  of  each  month  so  that  she  may  know  whether  she 
is  keeping  within  her  allowance  or  not.  For  example,  a  small 
expenditure  for  clothing  in  July  and  August  would  be  offset 
by  an  expenditure  in  November  and  December  larger  than 
the  budget  allowance.  In  the  same  way  a  small  expenditure 
for  fuel  in  May,  June,  July,  August,  and  September  would 
be  offset  by  a  heavy  expenditure  in  December,  January, 
February,  and  March. 

A  table  of  unexpended  balances  for  the  cash  book  illustrated 
on  pages  34  and  35  will  now  be  made.  The  total  must  be 
made  to  agree  with  the  cash  balance  taken  forward  to  the 
next  month.  It  must  be  understood  that,  since  rent  must  be 
paid  in  advance,  $16  must  be  carried  over  each  month  as  an 
unexpended  balance.  By  taking  the  difference  between  each 
budget  allowance  and  the  amount  actually  spent  as  shown  by 
the  total  of  the  column  the  amounts  of  the  unexpended  bal- 

39 


40     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 


ances  from  the  month  of  May  are  shown.  The  balance 
of  cash  on  hand,  $34.25,  for  May  1,  is  divided  up  in  the  first 
column  of  the  unexpended  balances.  If  a  payment  has  been 
made  that  exceeds  the  budget  allowance,  it  is  shown  in  the 
table  with  a  minus  sign  before  it.  The  sum  of  the  first  two 
columns,  or  the  difference  if  there  is  a  minus  quantity,  equals 
the  total  amount  unexpended  at  the  end  of  June  to  be  used 
for  July  and  succeeding  months. 

UNEXPENDED  BALANCES 


MAY  1 

MONTH  OF 
MAY 

TOTAL  JUNE  1 

Food  
Rent  .  . 

$      .75 
1600 

$1.08 

$    2.43 
1600 

Fuel  and  Light  .... 
Washing 

3.00 

3.85 

6.85 

Miscellaneous  
Clothing 

3.25 
9  15 

3.40 
—  1  93 

6.65-1.17  =  5.48 

7  22 

'Books  and  magazines  .  . 
Recreation 

.30 
50 

.68 
20 

.98 
70 

Church  and  Benevolence  . 
Health  . 

80 

.55 
63 

.55 
1  43 

House  Furniture  and  Fur- 
nishings 

50 

14 

64 

$34.25 

$9.20 

$43.45 
1.17 

$  42.28 

$34.25  plus  $9.20  equals  $43.45.  This  would  equal  the 
balance  of  cash  as  shown  by  the  cash  book,  $42.28,  but  the 
income  for  the  month  fell  short  of  the  expected  income  by 
$1.17.  This  amount  must  then  be  subtracted  from  $43.45, 
leaving  a  balance  of  $42.28,  which  proves  with  the  cash  book 
balance.  In  order  to  make  the  unexpended  balances  of  the 
budget  allowance  agree  with  the  actual  cash  balance,  $1.17 
must  be  deducted  from  one  of  the  items  or  divided  up  and 


UNEXPENDED  BALANCES  41 

deducted  from  several  of  them.  It  is  decided  to  deduct 
$1.17  from  the  Miscellaneous  Operating  Expenses,  leaving 
a  balance  of  $5.48  unexpended. 

Monthly  Summary.  Each  month  the  total  payments 
for  each  purpose  should  be  transferred  to  two  Summary 
pages  ruled  the  same  as  the  cash  book.  This  furnishes  a 
means  of  comparison  of  expenditures  month  by  month  and 
at  the  end  of  the  year  the  total  for  each  kind  of  expenditure 
can  be  found  and  compared  with  the  yearly  budget  allowance. 
In  using  the  cash  book  as  a  summary,  write  the  month  in  the 
Date  column,  the  monthly  receipts  in  the  Receipts  column, 
nothing  in  the  Items  and  Balance  columns  and  the  total  of 
each  of  the  other  columns  in  the  respective  columns.  The 
balance  of  cash  on  hand  at  the  beginning  of  the  year  should 
be  included  in  the  receipts  for  the  first  month,  but  for  the 
other  months,  the  actual  cash  received  for  that  month  should 
be  entered.  For  example,  suppose  the  balance  at  the  be- 
ginning of  the  year  is  $51.75  and  the  monthly  income  is  $100. 
In  the  monthly  summary  for  the  month  of  January,  or  better, 
on  a  separate  line  for  Balance,  $51.75  should  be  entered  and 
below  it  the  regular  income  $100.  For  each  of  the  succeeding 
months  $100  should  be  entered  in  the  Receipts  column. 

Exercise  12.  (concluded).  Use  the  same  cash  sheet  as 
for  the  exercise  in  Chapter  VI  as  this  is  a  continuation  of  the 
same  exercise,  or,  if  the  sheet  is  almost  full,  forward  the 
totals  to  a  new  sheet  and  make  the  entries  for  the  following 
transactions. 

September  16.   Paid  for  a  hat  for  Mrs.  Willis,  $2.50 ;  a  hat  for  Mabel 
$1.25;  washing,  $1. 

18.  Paid  for  meat  bill,  $2.35 ;  fruit  and  vegetables,  65c ; 

theater,  40c. 

19.  Paid  for  church,  50c ;  ice  cream,  20c. 


42      HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

September  20.  Paid  for  book,  $1 ;  soap,  25c;  curtains,  $2.85. 

22.  Paid  for  vegetables,  25c ;  stamps,  20c ;  stationery,  25c. 

24.  Paid  for  washing,  $1.25;  dresses  for  Clara,  $2.98. 

25.  Paid  meat  bill,  $2.15;    fruit  and  vegetables,  60c; 

shoes,  Mr.  Willis,  $3.50. 

26.  Paid  for  church,  35c ;  concert,  40c. 

27.  Paid  for  butter,  30c;  tie,  50c. ;  underwear,  $2.50. 

28.  Paid  for  vegetables,  35c ;    talcum,  20c ;    cloth  for  a 

dress,  Mrs.  Willis,  $2.75. 

29.  Paid  ice  bill,  $1.15;  telephone,  $1.50. 

30.  Paid  for  milk,  $3.10;    meat  bill,  $1.25;    fruit,  20c; 

newspaper,  25c. 

Find  the  cash  balance  on  the  18th,  25th,  and  30th.  Find 
the  total  of  each  column  and  prove  the  sum  of  the  Total 
Payments  column  with  the  sum  of  the  distribution  columns 
following. 

Exercise  13.  Make  a  table  of  Unexpended  Balances  from 
the  results  of  Exercise  12  and  prove  it  with  the  balance  of 
cash  as  shown  by  the  cash  book  balance. 

QUESTIONS  FOR  DISCUSSION 

1.  What  relation  exists  between  the  family  budget  and  the  keeping 
of  household  accounts  ? 

2.  What  are  the  three  essential  features  of  properly  keeping  family 
accounts  ? 

3.  How  does  the  keeping  of  family  accounts  differ  from  the  keeping 
of  personal  accounts  ? 

4.  Describe  the  special  column  cash  book  for  family  accounts  and 
explain  how  it  is  proved. 

5.  Under  what  conditions  would  it  be  advisable  to  enter  the  expendi- 
tures in  a  two-column  cash  book  before  entering  them  in  the  special 
column  cash  book  ? 

6.  What  is  the  value  of  a  table  of  unexpended  balances  ?     How  is  it 
made? 

7.  How  is  the  table  of  unexpended  balances  proved  with  the  actual 
cash  balance  ? 

8.  Explain  the  monthly  summary  of  expenditures. 


CHAPTER  VIII 
HOW  TO   OPEN  A  BANK  ACCOUNT 

MOST  housekeepers  find  it  an  inconvenience  and  risk  to 
keep  very  much  money  on  hand  for  the  payment  of  bills  and 
for  running  expenses.  This  is  especially  true  where  the  in- 
come is  received  monthly.  To  avoid  the  handling  of  so  much 
money  from  time  to  time,  the  housekeeper  should  have  a 
bank  account  on  which  she  can  draw  in  payment  of  bills  and 
from  which  she  can  draw  money  for  expenses  as  it  is  needed. 

The  housekeeper  is  the  manager  of  the  home,  and  as  such, 
should  pay  the  bills  that  pertain  to  the  home.  If  the  husband 
or  wage  earner  receives  his  income  in  money  he  should,  at 
each  pay  day,  turn  over  to  the  housekeeper  the  allowance 
that  has  been  decided  upon,  based  on  the  family  budget.  If 
the  wage  earner  receives  his  salary  in  the  form  of  a  check 
he  may  cash  it  and  either  deposit  her  allowance  in  the  bank 
in  her  name  or  turn  the  money  over  to  her  and  let  her  make 
the  deposit.  Or,  the  husband  may  deposit  his  salary  in  his 
account  at  the  bank  and  then  draw  a  check  on  his  account 
in  favor  of  his  wife  for  her  allowance,  which  she  can  deposit 
in  her  account  or  cash. 

To  open  a  commercial  or  checking  account,  the  depositor 
must  first  arrange  with  some  official  of  the  bank  certain  de- 
tails of  the  account.  The  depositor  must  either  be  intro- 
duced by  some  person  known  to  the  bank  or  answer  certain 
questions  in  reference  to  the  purpose  of  the  account,  the 

43 


44     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

amount  of  balance  to  be  kept  in  the  bank,  etc.  She  must 
then  fill  out  a  signature  card  giving  her  name,  address,  busi- 
ness address,  if  any,  and  any  other  information  that  the 
bank  desires.  The  depositor  should  sign  her  name  on  this 
card  as  she  intends  to  sign  her  name  on  checks.  It  is  best 
for  the  inexperienced  person  to  practice  a  signature  before 
going  to  the  bank  and  to  keep  a  record  of  the  signature  for 
reference.  A  change  in  the  method  of  writing  a  letter  or 
the  writing  of  the  given  name  at  one  time  and  simply  the 
initials  at  another  may  cause  the  bank  to  refuse  to  cash  a 
check. 

Banks  prefer  that  a  married  woman  sign  her  legal  given 
name  and  not  the  initials  or  given  name  of  her  husband  with 
Mrs.  prefixed.  Ella  G.  Mason,  wife  of  W.  L.  Mason,  would 
preferably  sign  her  name  Ella  G.  Mason  and  not  Mrs.  W.  L. 
Mason.  Although  this  practice  is  not  uniformly  followed  it 
is  the  best  practice  and  must  be  followed  in  signing  all  legal 
documents,  such  as,  deeds,  mortgages,  powers-of-attorney, 
leases,  etc. 

On  opening  the  account  a  bank  official  usually  makes  out 
the  first  record  of  what  is  deposited .  This  is  called  a  deposit 
ticket.  But  after  the  first  deposit  the  depositor  should  make 
out  a  deposit  ticket  whenever  a  deposit  is  made.  Every  bank 
furnishes  its  depositors  with  deposit  tickets  that  should  be 
used  when  making  a  deposit.  These  deposit  tickets  are  found 
in  a  convenient  place  at  the  bank  and  can  be  taken  home  and 
made  out  before  going  to  the  bank  or  can  be  made  out  at  the 
bank.  Money  should  be  listed  under  the  various  headings 
given  on  the  deposit  ticket,  usually  bills,  gold,  and  silver, 
but  sometimes  simply  bills  and  specie  or  coin.  Checks  and 
anything  else  that  the  bank  will  take  for  deposit  should  be 
listed  separately  under  the  head  of  Checks.  The  items  de- 


HOW  TO   OPEN   A  BANK   ACCOUNT 


45 


DEPOSIT  TICKET 


FIRST  NATIONAL  BANK 

OF  CHICAGO 
Deposited  for  account  of 

6CLL&&    (O~.     ^aAJWEA, 

fan&  /O,       JQ_ 

PLEASE  LIST  CHECKS  SEPARATELY  AND  SEE  THAT  THEY  ARE 
PROPERLY   INDORSED 

Gold 

Silver 

Bills 

25 

— 

Checks 

iLnuwv  cftafc  '  t 

50 

— 

75 

— 

• 

46      HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

posited  should  be  added  and  the  total  shown  below.  A  simple 
form  of  a  deposit  ticket  is  given  on  page  45.  Although  the 
forms  used  by  banks  differ  to  some  extent,  some  being  much 
more  detailed  than  others,  one  can  easily  understand  the  use 
of  a  new  form  by  reference  to  the  one  illustrated.  The 
pupil  should  obtain  deposit  tickets  from  several  banks 
and  compare  them  with  the  form  given  on  page  45. 
These  deposit  tickets  should  be  made  out  very  accurately 
and  it  is  best  to  destroy  one  and  rewrite  it  rather  than 
to  hand  in  one  that  has  erasures  and  figures  marked  over 
on  it. 

The  depositor  may  deposit  in  her  account  any  checks 
drawn  on  any  bank  of  the  city  or  on  a  bank  of  another  city, 
as  well  as  money  orders,  both  U.  S.  and  express,  and  bank 
drafts.  No  charge  is  made  on  city  checks,  money  orders, 
or  bank  drafts,  but  a  small  charge  may  be  made  on  out-of- 
town  checks.  This  is  usually  not  greater  than  lOc  or  15c 
for  amounts  under  $100.  It  may  be  paid  in  cash  or  be  de- 
ducted from  the  deposit  according  to  the  custom  at  the 
bank  or  the  wishes  of  the  depositor  if  the  bank  has  no  uniform 
custom.  In  taking  checks  for  deposit,  the  bank  does  so  with 
the  understanding  that  if  a  check  should  be  returned  by  the 
bank  on  which  it  is  drawn  because  of  "No  funds/'  or  because 
of  a  forgery,  the  amount  of  the  check  will  be  taken  out  of  the 
depositor's  account.  Suppose,  for  example,  that  Grace 
Jackson  has  deposited  in  the  National  Exchange  Bank  a 
check  drawn  on  the  First  National  Bank.  When  the  check 
is  sent  to  the  First  National  Bank,  it  is  found  that  the  signer 
of  the  check,  C.  D.  Conner,  has  not  sufficient  funds  in  the 
bank  to  pay  the  check.  The  First  National  Bank  then 
stamps  the  check,  "No  funds,"  protests  it,  and  sends  it  back 
to  the  National  Exchange  Bank.  It  is  then  taken  out  of 


HOW  TO  OPEN  A  BANK  ACCOUNT  47 

Grace  Jackson's  account.  This  is  usually  done  by  mailing 
to  the  depositor  a  "  Charge  Ticket  "  which  gives  the  par- 
ticulars of  the  transaction. 

All  checks,  bank  drafts,  and  money  orders  must  be  in- 
dorsed by  the  depositor  before  they  are  deposited.  To  in- 
dorse a  check,  turn  it  over  with  the  right  hand  holding 
the  right-hand  end  of  the  check  and  draw  the  right-hand 
end  towards  the  body.  Place  the  indorsement  on  the 
left-hand  end  across  the  end  of  the  check.  There  are 
two  common  forms  of  indorsement,  the  blank  and  the  full 
or  special. 

The  blank  indorsement  consists  in  writing  the  name  of  the 
payee,  the  one  to  whom  the  check  is  made  payable  on  its 
face,  and  nothing  else.  If  Clara  Brown  is  the  payee  of  a 
check  which  she  wishes  to  indorse,  she  may  simply  write  her 
name  on  the  back  about  an  inch  from  the  left-hand  end  of 
the  check,  as  follows : 


The  full  indorsement  consists  in  writing  the  name  of  the 
person  or  bank  to  whom  the  check  is  to  be  transferred  and 
certain  words,  such  as,  "  Pay  to  the  order  of/'  as  well  as  the 
signature  of  the  depositor.  For  example,  if  Clara  Brown 
wished  to  deposit  a  check  of  which  she  was  the  payee  in  the 
National  Exchange  Bank,  she  would  write  the  full  indorse- 
ment as  follows : 


48     HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 


PaA    to 


Bowk, 


Either  kind  of  indorsement  will  be  accepted  by  a  bank 
but  the  blank  indorsement  should  never  be  written  on  the 
check  until  it  is  taken  to  the  bank,  while  a  full  indorsement 
may  with  safety  be  written  on  the  check  at  any  time  before 
taking  it  to  the  bank.  The  reason  for  this  is  that  a  blank 
indorsement  makes  a  check  payable  to  any  one,  and,  if  the 
check  is  lost,  it  may  be  cashed  by  the  finder  before  payment 
on  it  can  be  stopped.  A  full  indorsement  makes  it  necessary 
for  the  person  in  whose  favor  it  is  drawn,  called  the  indorsee, 
to  indorse  it  before  it  can  be  cashed.  For  the  same  reason, 
if  the  payee  of  a  check  wishes  to  transfer  it  to  someone  else 
and  send  it  by  mail,  a  full  indorsement  should  be  used. 

When  making  the  first  deposit,  the  receiving  teller,  or  other 
officer  of  the  bank  will  enter  the  amount  of  your  deposit  in 
a  small  book  called  the  pass  book,  as  follows : 


June 


Deposit 


50 


This  is  the  only  receipt  that  the  depositor  receives.  Each 
time  that  a  deposit  is  made  the  pass  book  should  be  taken 
to  the  bank  with  the  deposit  ticket  and  the  items  deposited. 
Before  leaving  the  bank  the  depositor  should  examine  the 
entry  in  this  book  to  see  that  it  is  correct. 

It  sometimes  happens  that  it  is  inconvenient  to  go  to  the 
bank  to  deposit  a  check.  In  that  case,  the  check  may  be  de- 
posited by  mail.  The  pass  book  need  not  be  sent,  but  two  de- 


HOW  TO   OPEN  A  BANK  ACCOUNT  49 

posit  tickets  should  be  made  out  exactly  alike.  One  of  these 
the  bank  will  keep,  the  other  will  be  stamped  "  Duplicate," 
signed  by  the  employee  receiving  the  deposit,  and  sent  back 
as  a  receipt.  If  the  depositor  has  no  deposit  tickets  on  hand, 
the  check  may  be  properly  indorsed  and  sent  with  a  letter, 
and  the  bank  teller  will  make  out  the  deposit  tickets  and 
return  one  as  a  receipt.  Indorse  any  check  sent  to  the  bank 
in  that  way  in  full,  as,  "  Pay  to  the  order  of  National  Ex- 
change Bank,"  signed  "  Clara  Brown." 

If  one  should  forget  her  pass  book,  she  can  made  a  de- 
posit by  making  out  two  deposit  tickets  the  same  as  when  the 
deposit  is  made  by  mail.  In  either  case,  the  duplicate  de- 
posit ticket  should  be  taken  to  the  bank  with  the  pass  book 
the  next  time  that  a  deposit  is  made  and  the  bank  teller  will 
enter  the  amount  of  the  deposit  in  the  pass  book.  It  must  be 
understood  that  as  soon  as  the  deposit  is  made,  it  is  placed 
by  the  bank  to  the  credit  of  the  depositor,  no  matter  whether 
it  has  been  entered  in  the  pass  book  or  not. 

Exercise  14.  a.  Anna  Coulter,  wife  of  James  H.  Coulter, 
wishes  to  deposit  the  following  in  the  Commercial  Bank, 
July  26,  19 — :  bills,  $25 ;  silver,  $5 ;  and  a  check  in  her 
favor,  signed  by  her  husband,  for  $40.  Make  out  the  de- 
posit ticket. 

6.  Show  the  indorsement  of  the  check  by  a  full  indorsement. 

Exercise  15.  Minnie  Fuller,  wife  of  C.  A.  Fuller,  has  a 
check  to  her  order  for  $50.  She  wishes  to  pay  a  grocery  bill 
to  the  Home  Grocery  Co.,  amounting  to  $17.85,  and  receive 
the  balance  in  money.  The  Home  Grocery  Co.  cashes  the 
check  and  returns  $32.15  to  her.  The  company  then  trans- 
fers the  check  to  the  Evans  Wholesale  Grocery  Co.,  which 
deposits  it  in  the  Merchants  &  Manufacturers  Bank.  Show 
the  indorsement  made  by  each  party. 


CHAPTER  IX 

MAKING  PAYMENTS  BY  CHECK 

ONE  of  the  reasons  for  making  a  commercial  deposit  is  that 
checks  may  be  drawn  on  the  bank  in  payment  of  bills.  There 
are  many  reasons  for  paying  bills  by  check.  The  principal 
advantages  of  making  payments  by  check  are  as  follows : 

1.  It  does  away  with  the  inconvenience  and  risk  of  keep- 
ing large  amounts  of  cash  on  hand. 

2.  The  check  acts  as  a  receipt  when  returned. 

The  indorsement  on  the  check  and  the  "  Paid  "  stamp  of 
the  bank  constitute  a  receipt,  when  the  check  is  returned  by 
the  bank  at  the  end  of  the  month.  If  a  person  desires  a  more 
definite  receipt,  a  rubber  stamp  may  be  obtained  from  a 
stationer  that  will  stamp  the  following  on  the  back  of  the 
check  on  the  left  end  just  above  where  the  indorsement  will 
be  written : 

"  This  check  is  in  payment  of  bill  (or  bills)  of 

No  receipt  necessary/' 

By  filling  in  the  date  of  the  bill  or  bills  for  which  the  check 
is  given,  the  cancelled  check  will  constitute  the  very  best  kind 
of  a  receipt. 

3.  The  check  stub,  and  the  checks  when  returned,  furnish 
information  in  regard  to  payments  that  is  easier  to  find 
than  receipted  bills  or  receipts  when  payments  are  made  in 
money. 

50 


MAKING  PAYMENTS  BY  CHECK  51 

4.  The  check  furnishes  a  safe  means  of  paying  a  bill  when 
the  collector  is  not  known. 

Unless  the  housekeeper  receives  her  allowance  for  house- 
hold expenses  weekly,  and  therefore  is  not  compelled  to  keep 
much  money  on  hand,  it  is  a  great  advantage  to  make  the 
larger  payments  by  check.  Every  woman  should  know  how 
to  do  this  properly  and  how  to  keep  her  account  with  the  bank 
so  that  she  can  tell  at  any  time  just  what  balance  she  has 
in  the  bank. 

When  the  first  deposit  is  made  the  depositor  is  given  a 
check  book  which  is  furnished  free  of  charge  by  the  bank. 
This  consists  of  a  number  of  stubs  with  checks  attached 
by  perforations,  or  in  a  smaller-sized  check  book,  the  checks 
and  stubs  may  alternate.  The  check  stub  is  the  depositor's 
record  of  the  check  that  she  has  drawn  and  should  be  filled 
out  just  as  carefully  as  the  check  itself.  The  check  stub 
should  always  be  filled  out  first,  then  the  check.  In  opening 
a  check  book,  the  deposit  should  first  be  entered,  then, 
when  a  check  is  to  be  written  the  check  stub  should  be  filled 
out  like  the  illustration  on  page  52.  The  check  is  then 
written,  care  being  taken  to  see  that  all  the  items  on  the 
check  are  the  same  as  those  on  the  stub.  No  spaces  should 
be  left  blank  after  the  name  or  after  the  amount  written  in 
words,  but  they  should  be  filled  in  with  a  wavy  line.  The 
amount  should  be  written  in  words  and  in  figures.  Ten 
dollars  should  never  be  written  simply  $10.  but  $10^. 
$10.75  should  be  written  $KJ£.  The  amount  should  be 
written  in  words  with  cents  written  as  a  fraction  over  100. 
Place  all  amounts  close  to  the  dollar  sign.  See  that  the 
name  of  the  person,  firm,  or  company  in  whose  favor  the 
check  is  written  is  spelled  correctly.  Observe  bill  and  letter 
heads  carefully  in  order  to  get  the  names  correct. 


52     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 


STJL                                       No<  35 
t/zfitvmkz\,/2f  Jg_ 

Tn                            '        '        um'£' 

Fnr 

Balance  
Amt.  Deposited     .     . 
Total 
Amt.  Check      .     .     . 

„ 

80 

5 

75 

37 

05 

It  is  usually  best  not  CHECK  STUB 

to  write  a  check  for  less 
than  one  dollar  but  if 
it  is  necessary,  write  the 
amount  in  figures  with 
a  cipher  before  the 
decimal  point,  as  $0.75, 
and  cross  the  word 
Dollars  out  and  write 
the  amount  in  words,  as, 
"  Seventy-five  Cents." 

If  the  depositor  wishes 
to  draw  the  money  from 
the  bank  herself  it  is 

just  as  necessary  to  draw  a  check  as  if  the  depositor  were 
paying  some  one  else.  The  check  should  be  written  "  Pay 
to  the  order  of  Cash."  It  need  not  be  indorsed  and  it  is 
not  necessary  to  present  the  pass  book  with  it.  Or,  it  may 
be  made  payable  to  the  order  of  "  Self,"  and  indorsed  when 
presented  at  the  bank. 

Every  woman  should  keep  her  account  with  the  bank  on 
the  check  stub  so  that  she  may  know  at  any  time  just  how 
much  she  has  in  the  bank.  Each  time  a  deposit  is  made, 
it  should  be  added  to  the  previous  balance  and  each  time  a 
check  is  written,  the  amount  of  the  check  should  be  sub- 
tracted. In  order  to  guard  against  forgetting  a  deposit 
or  a  check,  the  addition  or  subtraction  should  be  made  as 
soon  as  the  deposit  is  entered  or  the  check  is  written.  If  the 
bank  account  becomes  low,  great  care  should  be  taken  to 
prevent  writing  a  check  for  more  that  the  depositor  has  in 
the  bank.  If  there  is  some  doubt  about  the  correctness  of 
the  balance  as  shown  by  the  check  stub,  it  is  best  to  test  the 


MAKING  PAYMENTS  BY  CHECK  53 

CHECK 


JFtrst  National  Bank 

OF  CHICAGO  ]SJQ| 


12,  1Q- 


Pay  to  the  order  of       fc    L' 


correctness  of  the  balance  in  another  way.  Start  with  the 
balance  at  the  beginning  of  the  month,  as  that  is  correct  if 
it  has  been  proved  with  the  bank's  statement  to  the  deposi- 
tor. To  this  add  all  the  deposits  made  during  the  month 
as  shown  by  the  pass  book.  Find  the  sum  of  all  the  checks 
written  during  the  month  and  subtract  that  sum  from  the 
sum  of  the  balance  at  the  beginning  of  the  month  and  the 
deposits  made  during  the  month.  If  the  balance  is  the  same 
as  found  by  the  other  method,  one  can  be  reasonably  sure 
that  it  is  correct.  If  it  is  not  the  same,  the  mistake  should 
be  found.  Care  should  be  taken  not  to,  at  any  time,  over- 
draw one's  account.  It  shows  a  lack  of  knowledge  of  bank 
business  and  may  cause  the  person  to  whom  the  check  is 
payable,  as  well  as  the  depositor,  considerable  inconvenience. 
In  many  states,  too,  it  is  a  criminal  offence  to  deliberately 
overdraw  one's  account. 

Several  other  cautions  should  be  added  to  those  already 
given.     Never  draw  a  check  in  blank,  i.e.,  sign  it  and  let 


54     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

some  one  else  fill  in  the  name  or  the  amount.  The  signer 
must  stand  any  loss  if  the  person  to  whom  the  privilege  is 
given  fills  it  out  for  more  than  the  amount  agreed  upon. 

Never  alter  a  check  after  it  has  been  written.  If  a  check 
has  been  written  incorrectly,  it  should  be  destroyed  and  a 
new  one  written.  Correct  the  stub,  tear  a  check  from  the 
back  part  of  the  check  book,  and  rewrite  the  check. 

In  paying  a  collector  for  a  bill  from  some  company, 
always  make  the  check  payable  to  the  company,  not  to  the 
collector. 

In  writing  a  check  payable  to  the  treasurer  or  other  officer 
of  a  club,  society,  or  church,  the  check  may  be  made  payable 

to  the  name  of  the  person  with  the  words,  Treasurer, 

Club  or  it  may  be  made  payable  to  the  name  of  the  club, 

society,  or  church  or  simply  to  the  Treasurer  of  

Club  without  the  name  of  the  treasurer  being  given.  For 
example,  the  check  might  be  made  payable  to  "  Scott 
Woman's  Club,"  to  the  "Treasurer,  Scott  Woman's  Club," 
or  to  "  Helen  Carr,  Treas.,  Scott  Woman's  Club." 

If  a  person  wishes  to  pay  taxes,  to  pay  a  note  due  at  another 
bank,  or  to  pay  some  one  for  some  property  and  receive  title 
to  it  at  once,  the  check  should  be  certified  before  presenting 
it.  To  do  this,  the  check  is  written  out  in  the  usual  way  and 
taken  to  the  bank.  The  check  is  there  stamped,  "  Good 
when  properly  indorsed  "  and  signed  by  the  cashier  or  assist- 
ant cashier.  The  bank  at  once  takes  the  amount  of  the  check 
out  of  the  drawer's  account  and  becomes  responsible  for  its 
payment. 

In  writing  checks  payable  to  a  professional  man,  such  as  a 
doctor  or  dentist,  no  title  should  be  written  either  before  or 
after  the  name.  A  check  to  pay  Dr.  Claude  B.  Root  should 
be  made  payable  to  Claude  B.  Root. 


MAKING  PAYMENTS  BY  CHECK  55 

At  the  end  of  every  month  the  bank  renders  to  each  de- 
positor a  statement  of  his  account.  Most  of  the  large  banks 
render  this  statement  on  a  special  bank  statement  form  that 
shows  the  balance  at  the  beginning  of  the  month,  the  deposits 
made  during  the  month,  the  checks  paid  by  the  bank  during 
the  month,  and  the  balance  at  the  end  of  the  month.  This 
statement  is  usually  placed  in  an  envelope  with  the  canceled 
checks  and  may  be  obtained  from  the  bank  at  any  time  after 
the  first  of  the  month.  Sometimes  the  statement  is  written 
on  the  outside  of  the  envelope  instead  of  on  a  separate  sheet. 
Some  banks  require  depositors  to  leave  their  pass  books  at  the 
bank  monthly  to  be  "  written  up."  To  write  up  the  pass 
book  the  bank  uses  the  pass  book  to  show  the  state  of  the  ac- 
count instead  of  using  a  separate  statement.  The  checks 
are  either  listed  in  the  pass  book  on  the  right-hand  page 
opposite  to  the  deposits  or  more  commonly  are  simply  listed 
on  an  adding  machine  slip,  which  is  returned  with  the  pass 
book,  and  the  total  of  the  checks  is  found  and  entered  on  the 
right-hand  side.  The  balance  is  then  found  by  subtracting  the 
total  checks  from  the  balance  at  the  beginning  of  the  month 
and  the  deposits.  The  balance  is  then  entered  under  the 
checks,  usually  in  red  ink,  and  the  pass  book  is  ruled.  This 
balance  is  then  brought  down  below  to  begin  the  next  month. 

As  soon  as  the  statement  is  obtained  from  the  bank,  the 
depositor  should  compare  every  deposit  and  check  with  his 
record  on  the  check  stub  and  make  a  note  of  any  checks  that 
have  not  been  returned.  If  all  the  checks  have  been  returned, 
of  course  the  bank  balance  and  the  depositor's  check  book 
balance  should  agree.  But  if  some  checks  that  were  written 
during  the  month  were  not  cashed  at  the  bank  they  will 
not  be  included  in  the  bank's  statement.  These  checks 
should  be  listed  by  number,  payee,  and  amount  on  the  back 


56      HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

of  the  check  stub  opposite  to  where  the  balance  at  the  end  of 
the  month  is  written.  The  sum  of  these  subtracted  from 
the  bank  balance  should  equal  the  check  stub  balance.  It 
is  best  to  mark  each  of  the  stubs  O  K  as  the  checks  are  com- 
pared with  the  check  stubs.  The  depositor  must  remember 
that,  although  she  has  more  in  the  bank,  in  a  case  of  this 
kind,  than  her  check  stub  shows,  it  is  unsafe  to  draw  checks 
up  to  the  amount  of  the  bank  balance  as  the  checks  that  were 
written  during  the  month  and  that  were  not  cashed  will  be 
cashed  soon  after  the  beginning  of  the  month.  If  the  bank 
statement  is  found  to  be  incorrect  it  should  be  returned  at 
once  to  the  bank  for  correction. 

Exercise  16.  a.  Lulu  Bond,  wife  of  Dr.  Charles  Bond, 
has  a  balance  of  $46.80  in  the  Union  National  Bank.  She 
wishes  to  draw  out  $10  for  personal  use.  Write  the  check 
stub  and  the  check.  Number  them  65  and  use  your  city 
and  the  current  date. 

b.  Mrs.  Bond  wishes  to  pay  her  grocer,  J.  N.  Darr,  $16.75. 
Write  the  check  stub  and  the  check.     Use  your  city  and  the 
current  date. 

c.  Mrs.  Bond,  at  the  end  of  the  current  month,  finds  from 
her  bank  statement  that  she  has  a  balance  amounting  to 
$57.80  instead  of  the  amount  shown  by  her  check  book.     In 
comparing  her  checks  returned  with  her  check  stubs  she  finds 
that  the  check  for  $16.75,  given  in  (b),  and  a  check,  number 
60,  in  favor  of  C.  L.  Lake,  for  $21,  were  not  returned.     Prove 
the  correctness  of  the  balance  on  check  stub  No.  66. 

QUESTIONS  FOR  DISCUSSION 

1.  What  steps  is  it  necessary  to  take  in  opening  a  bank  account  ? 

2.  What  is  the  object  of  a  signature  card  ?     How  should  it  be  filled 
out? 


MAKING  PAYMENTS  BY   CHECK 


57 


3.  What  is  a  deposit  ticket  ?     How  is  it  made  out  ? 

4.  What  will  be  taken  by  a  bank  for  deposit  ?     What  is  the  effect 
of  depositing  a  check  that  is  afterwards  returned  marked  "No  funds  "  ? 

5.  Give  two  kinds  of  indorsements  commonly  used.     When  should 
each  be  used  ?     Why  ? 

6.  What  is  a  pass  book  ?     Who  makes  the  entries  in  it  ?     Of  what 
value  is  the  pass  book  ? 

7.  How  may  a  deposit  be  made  if  the  depositor  has  forgotten  her 
pass  book  ?     May  a  deposit  be  made  by  mail  ? 

8.  WTiat  are  the  advantages  of  making  payments  by  check  ? 

9.  Explain  the  use  of  the  check  book. 

10.  What  points  should  be  observed  in  writing  checks  ? 

11.  How  should  a  check  be  drawn  when  the  depositor  wishes  to 
draw  money  from  the  bank? 

12.  How  should  a  depositor  keep  her  account  with  the  bank  ? 

13.  What  are  the  dangers  of  overdrawing  one's  account  ? 

14.  What  is  the  value  of  the  monthly  bank  statement? 

15.  What  is  meant  by  writing  up  the  pass  book  ? 

16.  How  should  the  check  book  be  proved  with  the  bank  statement  ? 

17.  What  is  the  value  of  a  canceled  check? 


CHAPTER  X 

ENVELOPE  AND  CARD  SYSTEMS  OF  KEEPING  ACCOUNTS 

THE  use  of  the  columnar  cash  book  to  record  household 
receipts  and  expenditures  is  considered  the  best  method 
and  the  easiest  to  operate.  It  would  no  doubt  be  preferred 
by  the  majority  of  housekeepers.  But  there  are  other 
methods  that  use  the  same  principles  in  different  ways  that 
some  housekeepers  prefer.  Since  the  two  requisites  of  a . 
good  system  of  keeping  household  accounts  are  an  accurate 
record  of  receipts  and  expenditures  and  an  easy  method  of 
ascertaining  the  amount  expended  for  each  purpose,  it 
follows  that  any  method  that  fulfills  these  conditions  may 
be  used  to  suit  different  conditions  and  different  individual 
tastes.  The  envelope  and  card  systems  illustrate  other 
methods  of  keeping  a  record  of  the  receipts  and  payments 
and  of  summarizing  the  expenditures  under  the  various 
heads.  These  systems  are  not  at  all  necessary  if  the  cash 
book  and  summary  already  illustrated  are  used.  Every 
system,  however,  should  be  based  on  a  family  budget.  It 
should  be  a  guide  to  expenditures,  but  should  not  be  followed 
so  slavishly  that  the  housekeeper  will  worry  over  every  little 
expenditure  above  the  budget  allowance  or  every  little 
amount  that  cannot  be  accounted  for.  It  must  be  em- 
phasized, however,  that  little  can  be  accomplished  unless 
the  work  is  done  systematically  and  accurately. 

THE  ENVELOPE  SYSTEM.     When  the  income  is  .received 
weekly  or  withdrawals  are  made  from  the  bank  weekly  for 

58 


ENVELOPE  AND  CARD  SYSTEMS 


59 


expenditures,  and  purchases  are  made  for  cash  or  paid  for 
weekly,  the  envelope  system  may  be  used.  This  involves 
the  use  of  an  envelope  for  each  purpose  outlined  in  the 
budget.  On  the  outside  of  the  envelope  should  be  written 
the  name  of  the  budget  division  and  the  weekly  budget  al- 
lowance. When  the  weekly  income  is  received  it  is  divided 
up  into  the  budget  allowances  and  the  estimated  amounts  of 
money  placed  in  the  respective  envelopes.  To  accompany 
each  envelope  there  should  be  a  card,  which  should  be  kept  in 
the  envelope,  on  which  is  recorded  the  receipts  and  expendi- 
tures for  the  purpose  designated  on  the  outside  of  the  enve- 
lope. The  card  should  be  the  ordinary  two-column  cash  card 
that  is  ruled  the  same  as  the  two-column  personal  cash  book 


19 


/tat, 


good*,, 


75 


75 


5 


50 
60 

50 
50 
20_ 
~50 


already  explained.  In  the  first  column  is  placed  the  balance, 
if  any,  from  the  previous  month  and  the  amount  received  for 
the  current  week.  In  the  second  column  is  placed  all  expend- 


60     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

itures  from  this  fund.  The  balance  should  be  found  several 
times  a  week  and  the  cash  proved  with  the  actual  cash  on 
hand  in  the  envelope.  In  some  cases  one  or  more  cards  may 
be  needed  for  a  week,  as  in  the  case  of  food,  while  in  others, 
such  as  rent  and  car  fare,  but  one  card  will  be  needed  for  a 
month.  The  cards  should  be  taken  from  the  envelope  and 
filed  monthly.  If  all  of  the  cards  for  the  same  purpose  are 
placed  together  month  after  month  in  proper  order,  they  will 
be  much  more  valuable  as  references.  A  weekly  card  for 
clothing  would  appear  as  shown  on  page  59. 

The  balance  should  be  placed  in  small  figures  just  to  the 
left  of  the  Received  column.  The  card  should  be  balanced 
monthly  and  the  balance  carried  forward  to  a  new  card. 

When  a  card  is  filled  the  total  of  each  column  should  be 
forwarded  to  a  new  card  unless  it  is  the  end  of  the  month. 
With  these  cards  a  Summary  card  should  be  used  for  each 
subject  to  which  is  transferred  monthly  the  total  expenditure 
for  that  purpose. 

While  this  is  a  simple  method  and,  it  might  seem,  easy  to 
operate,  it  presents  some  difficulties.  In  the  first  place,  it  is 
not  always  an  easy  matter  to  secure  change  with  which  to 
make  the  exact  weekly  division  for  the  envelopes.  Second, 
it  is  not  always  possible  to  make  exact  change  from  the  proper 
envelope,  especially  is  this  true  when  fruit,  vegetables,  etc. 
are  purchased  at  the  house  instead  of  from  the  store.  This 
often  leads  to  borrowing  from  one  envelope  and  failing 
to  return  the  proper  amount.  In  the  same  way,  the  al- 
lowance for  some  purpose  may  be  "short"  and  the  necessary 
amount  is  borrowed  from  some  other  envelope.  The  third 
disadvantage  of  this  method  lies  in  the  necessity  of  keeping 
considerable  money  on  hand  all  of  the  time  and  the  danger 
of  loss  on  account  of  this.  This  system,  if  carefully  followed, 


ENVELOPE  AND   CARD   SYSTEMS  61 

will  give  all  the  information  needed  to  the  housekeeper  in 
managing  the  home,  but  it  is  cumbersome  and  may  cause 
considerable  anxiety  concerning  the  safe-keeping  of  the 
money.  It  has  one  very  decided  advantage  for  many  per- 
sons in  that  it  concretely  forces  the  attention  of  the  house- 
keeper to  a  comparison  of  the  actual  expenditures  for  any 
purpose  with  the  budget  allowance  and  thus  helps  the  house- 
keeper to  keep  within  the  allowance. 

THE  CARD  SYSTEM.  In  the  cards  used  in  the  envelope 
system  the  cards  were  made  to  act  as  entry  cards  and  also 
to  show  the  total  expenditures  for  each  purpose.  Without 
the  use  of  the  envelopes,  the  same  thing  may  be  accom- 
plished by  the  use  of  a  card  filing  system  that  has  many  ad- 
vantages. To  use  this  system  successfully,  one  should 
obtain  from  a  stationer  a  wooden  or  pasteboard  filing  box 
of  a  size  to  fit  the  cards  to  be  used.  The  best-sized  card 
to  use  is  either  3  in.  by  5  in.  or  4  in.  by  6  in.  With  the  filing 
box  a  set  of  index  cards  should  be  obtained.  A  card  should 
then  be  made  out  for  each  division  of  the  budget,  corre- 
sponding to  the  distributive  columns  of  the  columnar  cash 
book  explained  in  Chapter  VI,  or  very  similar  to  the  headings 
used  there.  The  cards  used  for  this  purpose  may  be  almost 
any  style  of  card  ruled  with  a  money  column  but  the  ordinary 
ledger  ruling  is  preferable.  Each  of  these  cards  would  be 
styled  by  a  bookkeeper  as  an  account.  He  would  speak  of  the 
Food  account,  the  Rent  account,  etc.  These  ledger  cards 
are  not,  however,  cards  of  entry  but  rather  cards  of  transfer. 
The  entries  should  be  made  on  cash  cards  or  in  a  cash  book, 
in  the  order  that  they  occur,  in  order  to  furnish  information 
concerning  receipts  and  payments  and  the  balance.  Re- 
ceipts may  be  entered  on  one  card  and  payments  on  another, 
or  better,  the  receipts  and  payments  may  be  entered  on  the 


62     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 


same  card  in  the  same  form  as  the  two-column  cash  book. 
The  author  believes  that  for  this  purpose  a  small  loose-leaf 
or  bound  cash  book  is  to  be  preferred  to  a  card  or  cards. 

The  one  important  point  of  difference  in  the  use  of  this 
cash  book  is  that  every  payment  is  classified  as  it  is  made  and 
also  explained.  The  classification  depends  upon  the  budget 
classification  and  the  card  ledger  accounts  or  headings.  For 
example,  if  40c  was  paid  out  for  meat,  it  would  be  entered 
as  follows  in  a  two-column  cash  book : 


Oct. 


Food 


2  Ib.  Beef 


40 


or,  if  separate  accounts  were  kept  for  different  divisions  of 
food,  such  as  meat,  milk,  butter,  vegetables,  fruit,  flour,  dry 
groceries,  etc.,  Meat  would  be  the  name  of  the  account 
and  the  explanation  would  be  the  same.  Or,  if  $3  was  paid 
out  for  a  hat  for  Mrs.  Brown,  it  would  be  recorded  as  follows  : 


Oct. 


Clothing,  Mrs.  B. 


Hat 


It  will  be  seen  by  these  examples  that  in  the  cash  book 
the  first  wide  column  after  the  date  column  is  used  for  the 
name  of  the  classification,  that  is,  the  name  of  the  account, 
and  the  next  column  for  the  explanation. 

These  records,  called  by  the  bookkeeper  entries,  must 
then  be  transferred  to  the  ledger  cards.  This  is  called  by 
the  bookkeeper  posting.  Posting  should  be  done  by  the 
housekeeper  often  and  the  work  should  not  be  allowed  to 
accumulate.  This  can  best  be  accomplished  by  setting 
aside  a  certain  time  each  day  to  make  the  entries  and  to 
post  them.  To  post,  the  card  account  is  taken  out  of  the 


ENVELOPE  AND  CARD  SYSTEMS 


63 


ledger  box  or  file  from  behind  the  index  card.  The  posting 
of  the  purchases  of  meat,  40c,  and  of  clothing,  $3,  would  be 
made  as  follows : 


.00 


19— 
fct. 

2 

3 

,  $7.50 


19— 
fat. 

6 

Kat 

i 

3 

- 

In  studying  these  two  postings  the  student  will  observe 
that  the  figure  9  placed  before  the  amount  represents  the 
page  of  the  cash  book  from  which  the  entry  was  transferred. 
The  article  bought  may  be  written  in  each  account,  but  it  is 
hardly  necessary  under  an  account  like  Food  or  its  sub- 
divisions, but  for  accounts  like  Clothing,  Miscellaneous  Ex- 
penses, or  Furniture  and  Furnishings  it  is  quite  necessary 
that  the  items  bought  be  recorded.  After  each  item  has 
been  transferred  from  the  cash  book  to  the  proper  card 
ledger  account,  it  should  be  checked  in  the  cash  book  as 
shown  in  the  illustration.  Bookkeepers  use  simply  the 
left-hand  side  of  the  ledger  account  for  accounts  that  repre- 
sent payments  for  expenses,  but,  unless  an  elaborate  proof 
is  to  be  made,  such  as  the  bookkeeper  makes,  both  sides 
of  the  account  can  just  as  well  be  used.  When  the  left- 


64     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

hand  column  is  filled,  it  is  totaled  and  forwarded  to  the 
right-hand  column.  When  the  card  is  filled,  the  total  of 
it  is  transferred  to  the  left-hand  side  of  another  card  and  so 
on.  In  each  case  the  last  card  should  be  placed  in  the 
ledger  file  in  front  of  the  one  from  which  it  was  transferred. 
Exercise  17.  Use  a  two-column  cash  sheet  or  card  and 
enter  the  following  transactions  in  it  by  naming  each  ac- 
count affected  and  explaining  it.  Then  transfer  or  post  the 
items  to  the  ledger  cards  as  explained  in  this  chapter.  Open 
up  all  the  accounts  necessary,  but  write  an  explanation  of 
the  article  purchased  in  the  following  accounts  only  :  Miscel- 
laneous Expenses,  Clothing  Account  for  each  member  of  the 
family,  Books  and  Magazines,  Recreation,  Health,  and 
Furniture  and  Furnishings.  The  transactions  represent 
those  of  the  J.  A.  Bond  family  consisting  of  Mr.  Bond,  Mrs. 
Bond,  and  two  children,  James  and  Gladys. 

November    1.  Balance  from  October,  $52.80. 

1.  Received  the  monthly  salary,  $110. 

1.  Paid  rent  of  house  for  November,  $20. 

2.  Paid    for    dry    groceries,    $5.75;     vegetables,    30c; 

1  T.  coal,  $5.25;   magazine,  15c;   meat,  23c. 

5.  Paid  for  church,  15c;  milk,  6c. 

6.  Deposited  in  savings  fund,  $5;   in  savings  bank  for 

life  insurance,  $3.75. 

7.  Paid  for   meat,   45c;    fruit,   20c;     subscription   to 

Good  Housekeeping,  $1.50. 

8.  Paid  for  washing,   75c;    gas  bill,   $1.85;    hat  for 

James,  75c. 

9.  Paid  for  soap,  25c;    medicine,  50c;    pillow  cases, 

$1 ;  meat,  30c. 

10.  Paid  for  book,  $1.25;    groceries,  40c;    butter,  32c; 

suit,  Mr.  Bond,  $18.75. 

11.  Paid  for  meat,  45c;   fruit,  25c;    shoes,  Mrs.  Bond, 

$3;   stockings,  Gladys,  50c;   picture,  $1.75. 


ENVELOPE  AND   CARD  SYSTEMS  65 

November    12.   Paid  for  church,  30c. 

13.   Paid  for  telephone,  lOc ;  vegetables,  20c ;  rubbers, 

Mr.  Bond,  80c;  concert,  20c. 
15.   Paid  for  meat,  30c;  electric  light  bill,  95c;  doctor, 

$1. 

Balance  the  cash  book.  Retain  the  cash  sheets  and  the 
ledger  cards,  for  they  will  be  used  in  the  completion  of  this 
exercise  in  the  next  chapter. 


CHAPTER  XI 

KEEPING  CREDIT  ACCOUNTS 

IN  opening  up  a  charge  account  at  a  store,  the  applicant 
is  usually  required  to  fill  out  an  application  for  credit.  This 
contains  the  name  and  address  of  the  person,  the  position 
held,  or  if  a  married  woman,  the  position  held  by  her  husband, 
and  the  names  and  addresses  of  two  or  more  references  of 
whom  the  store  may  inquire.  Other  information  is  some- 
times called  for,  such  as,  the  salary  of  the  applicant  or  of  the 
applicant's  husband,  if  the  applicant  is  a  married  woman, 
the  length  of  time  employed  in  the  present  position,  by  whom 
employed  previously  and  for  how  long.  Blanks  and  any 
information  may  be  obtained  from  the  credit  department  of 
the  store.  If  the  application  is  satisfactory,  the  store  will 
send  a  letter  to  the  applicant  granting  credit. 

Care  should  be  taken  in  making  purchases  on  account  not 
to  exceed  the  budget  allowance  for  the  particular  class  of  arti- 
cles purchased.  This  can  best  be  done  by  a  careful  scrutiny 
of  the  bills  received  and  by  the  use  of  credit  cards  as  ex- 
plained below. 

Cards  furnish  the  best  means  of  keeping  a  record  of  pur- 
chases on  account,  especially  if  no  bill  is  received  with  the  pur- 
chase, also  for  installment  purchases,  investments,  purchases 
of  property,  etc. 

Ordinarily,  when  a  purchase  is  made  on  account  from 
a  store  a  bill  is  made  out  by  the  clerk  and  given  to  the 

66 


KEEPING  CREDIT  ACCOUNTS       .  67 

purchaser.  These  bills  should  be  preserved  until  they  are 
settled  in  full.  Grocery,  meat,  and  other  provision  stores 
use  the  duplicate  bill  system  and  do  not  render  a  statement 
of  the  items  purchased  at  the  end  of  the  month.  But  de- 
partment stores  and  other  large  retail  stores  render  a  state- 
ment at  the  end  of  the  month  of  all  items  purchased  during 
the  month  on  account.  The  daily  purchase  bills  should 
be  put  in  some  convenient  place  as  they  are  received,  such  as 
on  a  spindle,  and  at  the  end  of  the  month  compared  with  the 
statement  before  payment  is  made,  or  if  no  statement  is  re- 
ceived, the  bills  should  be  computed  to  see  that  the  total  at 
the  end  of  the  month  is  correct.  The  statements  and  re- 
ceipted bills  should  be  filed  in  some  convenient  file  for  refer- 
ence. The  most  satisfactory  file  to  use  for  this  purpose 
is  the  ordinary  letter  file  which  can  be  purchased  for  from  25c 
to  50c.  It  can  be  closed  up  like  a  book  and  being  supplied 
with  index  sheets,  it  is  a  simple  method  of  filing.  More 
elaborate  methods  may  be  used  but  they  necessitate  a  filing 
desk  or  cabinet. 

The  use  of  credit  cards  is  to  give  information  relative  to 
the  state  of  the  account  with  any  creditor.  It  is  in  addition 
to  and  supplementary  to  the  system  used  as  it  can  be  used 
with  the  columnar  cash  book  system,  the  envelope  system, 
or  the  card  ledger  system.  A  record  of  the  purchase  is  first 
made  in  the  day  book  or  journal  explained  in  Chapter  VI. 
This  record  may  be  in  a  bound  book,  in  a  loose-leaf  book, 
or  on  a  card,  but  the  card  is  the  poorest  form  of  the  three. 
This  first  record  or  entry  should  contain  all  the  important 
facts  relative  to  the  contract,  as,  the  date  of  purchase,  seller, 
articles  bought,  terms  of  payment,  date  of  payment,  interest 
rate,  if  any,  and  other  important  elements.  This  record 
should  then  be  transferred  to  a  card  headed  with  the  name 


68     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

of  the  creditor.  Suppose  that  a  piano  is  purchased  of  the  C. 
E.  Shore  Co.  for  $350,  with  interest  at  5%.  The  terms  are  : 
$10  down  and  $10  per  month  on  the  first  day  of  each  month  ; 
interest  payable  after  the  principal  has  been  paid  in  full. 
Suppose  that  the  purchase  was  made  on  Sept.  15.  The  card 
would  be  opened  up  by  transferring  the  $350  to  the  right- 
hand  side  of  the  ledger  card.  The  reason  that  the  right- 
hand  side  is  used  is  that  bookkeepers  call  that  the  credit 
side  and  the  C.  E.  Shore  Co.  has  given  credit  and  is  therefore 
spoken  of  as  a  creditor  of  ours.  A  second  reason,  as  we  have 
learned,  is  that  when  a  payment  of  $10  is  made  it  would  be 
entered  on  the  Payments  side  or  column  of  the  cash  book 
and  transferred  to  the  left-hand  side  of  the  ledger  account 
the  same  as  a  payment  for  food,  clothing,  etc.  This  is 
called  charging  or  debiting  the  account.  The  ledger  card 
for  this  record  would  appear  as  follows  after  three  payments 
had  been  made : 


386 


:    $  /O 


19  

19  

Sfsfa. 

15 

&a*A 

// 

to 

— 

t/efiL 

15 

$iam,o 

&2 

360 

—  • 

fat. 

/ 

" 

/3 

/O 

** 

f 

" 

n 

/O 

— 

It  must  be  remembered  that  the  ledger  credit  record  is  a 
supplementary  record  and  that  the  payment  should  be  en- 
tered on  the  cash  book  under  the  head  of  the  Furniture  or 


KEEPING  CREDIT  ACCOUNTS 


69 


Piano  account,  and  with  the  name  of  the  company  as  an 
explanation,  as  follows : 


Sept. 


15 


Furniture 
(or  Piano) 


C.  E.  Shore  Co. 


10 


The  $10  should  be  posted  to  the  Furniture  account  and  to 
the  memorandum  account  of  the  C.  E.  Shore  Co. 

In  the  same  way,  the  purchase  of  a  house  and  lot  from  the 
West  Realty  Co.  for  $3800,  with  a  payment  of  $300  down  and 
$30  per  month,  with  interest  at  5%,  should  be  entered  when 
purchased  on  the  credit  side  for  $3800  and  on  the  debit  side 
for  $300  when  the  payment  is  made.  Each  monthly  payment 
would  be  entered  in  the  cash  book  to  Property  and  posted  to 
the  debit  side  of  that  account  and  also  to  the  debit  side  of 
the  memorandum  account  of  the  West  Realty  Co.  As  the 
interest  is  adjusted  yearly,  the  entry  for  the  interest  on  the 
amount  owed  and  on  the  payments  would  be  made  at  the 
end  of  the  year.  The  method  of  computing  the  interest 
will  be  explained  under  "Buying  a  Home"  in  Chapter  XVIII. 

Exercise  17  (Concluded}.  Use  the  same  cash  sheet  or 
card  and  ledger  cards  as  for  the  first  part  of  this  exercise  in 
the  last  chapter  and  enter  the  following  transactions. 

November  16.   Paid  for  dry  groceries,  $4.32 ;  talcum,  15c ;  meat,  lOc. 
18.   Paid  for  theater,  75c ;  rug,  $3 ;  coat  for  James,  $5 ; 
fruit,  15c. 

20.  Paid  for  car  tickets,  $1 ;  washing  and  cleaning,  $1 ; 

meat,  35c. 

21.  Bought  a  victrola  of  the  C.  Winter  Co.,  on  the  in- 

stallment plan  for  $50,  and  records  for  $8.  Paid 
$9  down  and  agreed  to  pay  $9  the  second  month 
and  $5  per  month  thereafter  on  the  21st  of  each 


70     HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

month  until  the  entire  amount  is  paid.  Enter 
this  purchase  on  a  daybook  sheet  or  card.  Open 
a  card  account  for  the  creditor  in  addition  to  the 
regular  account  for  Furniture,  or  better  for 
"Victrola  and  Records"  or  "Musical  Instru- 
ments." 

November  23.   Paid  for  meat,  30c ;   benevolence,  50c ;   tooth  paste, 
20c. 

24.  Paid  for  dress  goods,  Mrs.  Bond,  $3.65 ;    trimmings 

for  dress,  75c ;   coffee  pot,  75c. 

25.  Paid  for  groceries,  $2.15;    meat  60c;     fruit,  30c; 

photoplay,  15c. 

26.  Paid  for  church,  20c ;  street  car  ride  to  park,  25c. 

29.  Paid  for  meat,  30c ;  washing,  75c. 

30.  Bought  a  house  and  lot  of  the  Hartman  Realty  Co. 

for  $3000,  payable  $300  down  and  $25  per  month 
till  paid,  with  interest  at  5%.  Drew  $300  from 
the  National  Exchange  Bank,  Savings  Depart- 
ment, and  made  the  first  payment.  Enter  this 
purchase  on  the  day  book  card  or  sheet  used  for 
the  Victrola  purchase,  with  a  full  explanation  of 
the  contract.  Enter  the  $300  as  cash  received 
from  Savings  and  then  enter  the  $300  paid  on 
the  property.  Open  a  new  account  for  Property 
and  also  a  new  credit  account  for  the  Hartman 
Realty  Co.  and  post  the  entries  to  the  accounts. 
30.  Paid  for  milk,  $3.15;  moving  expenses,  $6. 

Balance  the  cash  book.  Find  the  sum  of  all  the  expense 
cards,  not  including  the  two  memorandum  accounts  for  the 
C.  Winter  Co.  and  the  Hartman  Realty  Co.,  and  subtract 
the  sum  from  the  total  cash  received  this  month.  The  dif- 
ference should  be  the  same  as  the  cash  balance.  If  it  does 
not  agree,  the  student  should  check  the  addition  of  each  card 
and  the  posting  to  each  card  if  the  mistake  cannot  be  found 
without  doing  so. 


KEEPING  CREDIT  ACCOUNTS  71 

QUESTIONS  FOR  DISCUSSION 

1.  What  are  the  essential  elements  of  any  good  system  of  keeping 
household  accounts? 

2.  Under  what  conditions  may  the  envelope  system  be  used  to 
advantage  ? 

3.  Explain  the  use  of  the  envelope  system. 

4.  What  accounts  should  be  kept  in  connection  with  the  envelope 
system  ? 

5.  What  are  the  disadvantages  of  the  envelope  system? 

6.  What  is  the  purpose  of  the  ledger  card  ?     How  is  it  used  ? 

7.  How  are  entries  made  in  the  cash  book  when  the  ledger  cards 
are  used  ? 

8.  What  is  posting  ?     How  is  it  done  ? 

9.  What  is  meant  by  charging  an  account  ? 

10.   What  is  meant  by  a  credit  account  ?     What  is  the  object  of  such 
an  account? 

11.  On  which  side  of  a  credit  account  is  a  purchase  from  a  creditor 
entered?     Why? 

12.  On  which  side  of  a  credit  account  is  a  payment  on  the  account 
entered?     Why? 

13.  Is  it  necessary  to  keep  card  credit  accounts  for  the  ordinary 
purchases  on  account  when  bills  are  received  for  all  purchases? 

14.  In  using  the  card  system  of  keeping  household  accounts,  how 
can  the  correctness  of  the  posting  to  the  various  expense  accounts  be 
proved  with  the  cash  balance  at  the  end  of  the  month  ? 

15.  What  should  be  done  if  the  expense  accounts  do  not  prove  with 
the  cash  balance  ? 


CHAPTER  XII 

THE  HOUSEHOLD  INVENTORY  AND  FIRE  INSURANCE 
PROTECTION 

THERE  are  several  important  reasons  why  every  household 
should  keep  an  inventory  of  the  household  goods  and  furni- 
ture. The  most  important  of  these  are  the  need  of  an  inven- 
tory for  insurance  purposes,  the  necessity  of  an  inventory 
before  making  out  the  family  financial  statement,  and 
the  advantage  of  having  an  inventory  in  making  estimates 
and  allowances  for  buying  new  furniture. 

Its  importance  for  fire  insurance  purposes  may  be  seen 
from  the  following  quotation  from  the  standard  insurance 
policy  of  the  state  of  New  York :  "If  fire  occur,  the  insured 
shall  give  immediate  notice  of  any  loss  thereby  in  writing  to 
this  company,  .  .  .  make  a  complete  inventory  of  the  same, 
stating  the  quantity  and  cost  of  each  article  and  the  amount 
claimed  thereon." 

The  necessity  of  a  household  inventory  for  making  out  the 
family  financial  statement  and  its  advantage  in  buying  new 
furniture  will  be  seen  in  the  chapters  that  follow. 

THE  HOUSEHOLD  INVENTORY.  A  household  inventory  is 
a  list  of  the  articles  on  hand,  the  number  of  each,  and  a  short 
description  of  the  article,  when  necessary,  the  date  of  pur- 
chase, the  cost,  and  the  present  value.  In  taking  the  inven- 
tory it  is  best  to  use  a  book  about  seven  inches  wide,  with 
every  other  leaf  a  narrow  leaf  about  four  inches  wide.  Books 

72 


INVENTORY  AND  FIRE   INSURANCE  73 

of  this  kind  can  be  purchased,  or  they  can  be  made  by  cut- 
ting off  every  other  leaf  of  an  ordinary  notebook.  The  object 
of  this  is  to  save  the  rewriting  of  the  articles  and  to  furnish 
a  better  means  of  comparison  year  by  year.  In  this  way 
the  names  of  the  articles  need  not  be  rewritten  oftener  than 
once  in  every  five  or  more  years. 

The  inventory  should  be  taken  by  rooms,  with  the  excep- 
tion of  personal  effects  including  clothing  and  jewelry.  The 
house  should  first  be  outlined  as  to  rooms  and  a  separate  page 
or  pages  used  for  each  room.  The  following  is  suggestive : 

Hall  Front  Bedroom 

Reception  Room  Middle  Bedroom 

Living  Room  Back  Bedroom 

Dining  Room  Attic 

Kitchen  Basement 

Bathroom  Personal  Effects 
Pantry 

Let  us  suppose  that  the  family  first  decided  to  take  in- 
ventory at  the  end  of  the  year  1916.  The  illustration  on 
page  75  shows  an  inventory  of  a  living  room,  with  a 
form  for  its  use  continuously  for  several  years  by  making 
a  deduction  each  year  for  depreciation.  In  studying  the 
form  illustrated  here  it  will  be  noticed  that  a  short  descrip- 
tion of  each  article  is  given  in  naming  the  article.  The  date 
of  the  purchase  is  given  by  month  and  day  when  known 
and  in  other  cases  simply  the  month  is  given.  The  value 
Dec.  31, 1916  allows  for  a  depreciation  depending  on  the  use 
of  the  article  and  the  length  of  time  that  it  has  been  in  use. 
It  is  usually  best  in  estimating  the  depreciation  to  take  off 
a  certain  per  cent  of  the  cost  each  year  depending  upon  the 
length  of  time  that  the  article  is  estimated  to  last  and  what, 
if  any,  will  be  its  worth  when  it  is  sold  second-hand.  It  is 


74     HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

difficult  to  fix  any  per  cent  to  be  deducted,  as,  the  quality 
of  the  article,  its  use,  and  proper  attention  to  cleaning  and 
repairing  differ  so  materially.  It  is  well  known  that  some 
furniture  will  last  a  lifetime  under  ordinary  usage,  while 
other  furniture  that,  perhaps,  cost  little  less  will  go  to  pieces 
in  a  few  years.  Of  course,  rugs,  carpets,  curtains,  and  other 
furnishings  do  not  last  as  long  as  furniture,  and  a  greater  per 
cent  must  be  taken  off  each  year.  The  housekeeper  must 
judge  by  experience  how  much  must  be  deducted  each  year  for 
depreciation.  Care  should  be  taken  in  inventorying  table  and 
bed  linen  and  articles  of  personal  clothing,  as  they  must  be 
replaced  often.  If  anything  of  this  kind  wears  out  or  is  dis- 
carded before  the  full  estimated  depreciation  is  taken  off, 
the  value  left  on  the  books  must  be  entirely  deducted.  If, 
for  example,  four  tablecloths  are  inventoried  at  $3  each,  and 
they  are  expected  to  last  four  years,  a  deduction  of  $3  would 
be  made  each  year.  At  the  end  of  the  third  year,  they 
would  be  inventoried  at  $3.  But,  suppose  that  three  are  en- 
tirely worn  out  and  the  fourth  is  worth  but  little,  the  inven- 
tory value  should  be  the  value  of  the  tablecloth  remaining, 
say,  75c. 

In  inventorying  books,  pictures,  linen,  china  and  silverware, 
musical  records  and  rolls,  it  is  best  to  list  them  in  a  separate 
place  in  the  inventory  book  and  by  rooms  simply  give  the 
total  of  each  kind.  This  is  especially  true  of  these  articles 
if  there  are  a  great  many  to  be  inventoried. 

The  total  for  each  room  should  be  found  and  placed  at  the 
foot  of  the  page,  no  matter  whether  the  page  is  full  or  not. 
When  new  articles  are  bought,  they  should  be  added  to  the 
list  on  the  same  page,  or  on  a  new  one  if  the  page  for  the 
previous  year  is  full.  A  summary  page  at  the  close  of  the 
book  should  be  used  to  find  the  total  of  the  different  rooms. 


INVENTORY  AND  FIRE   INSURANCE 


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76      HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

This  should  be  continuous,  also,  so  that  comparison  may  be 
made  year  by  year. 

Articles  bought  on  the  installment  plan,  such  as  furniture, 
musical  instruments,  books,  etc.  should  be  inventoried  at  the 
contract  price  and  deduction  made  from  it  each  year  for 
depreciation,  no  matter  how  much  has  been  paid  on  it.  This 
is  true  even  if,  legally,  the  goods  are  not  the  property  of  the 
buyer  until  they  are  fully  paid  for.  As  will  be  seen  under 
the  discussion  of  fire  insurance,  articles  purchased  on  the 
installment  plan  are  at  the  risk  of  the  buyer  and  the  buyer 
must  pay  for  them  if  they  should  be  destroyed  by  fire  before 
they  are  paid  for. 

FIKE  INSURANCE.  At  the  beginning  of  this  chapter,  mention 
was  made  of  the  advisability  of  keeping  a  household  inven- 
tory for  insurance  purposes  and  the  reason  was  given.  In 
addition  to  that,  it  is,  in  many  cases,  difficult  to  tell  how  much 
to  insure  the  goods  for  if  no  inventory  is  kept. 

Insurance  companies  will  not  insure  personal  property  or 
real  property  for  more  than  from  two-thirds  to  three-fourths 
of  its  value.  In  taking  out  insurance,  it  is  best  to  find  the 
inventory  value  and  then  take  about  three-fourths  of  it  to 
get  the  amount  of  the  insurance  risk.  The  amount  paid  to 
the  insurance  company  for  carrying  the  risk  is  called  the 
premium.  It  is  usually  stated  as  so  much  for  each  $100  in 
the  risk  and  sometimes  an  extra  fee  for  writing  the  policy. 
The  rate  depends  on  the  kind  of  building,  its  use,  its  nearness 
to  other  buildings,  and  the  fire  protection  in  the  city  or  lo- 
cality of  the  city.  For  example,  suppose  that  household 
goods  are  inventoried  at  $1200  and  are  insured  for  three- 
fourths  of  their  value  for  40c  for  each  $100.  The  amount 
of  the  risk  would  be  three-fourths  of  $1200,  or  $900.  The 
premium  to  be  paid  would  be  9  times  40c  or  $3.60.  This 


INVENTORY  AND   FIRE   INSURANCE  77 

would  be  the  premium  per  year.  But  the  property  could  be 
insured  for  three  years  at  once  for  80c  for  each  $100.  A 
saving  of  one  year's  insurance  is  made  in  this  way.  Persons 
that  lease  property  do  not  need  to  be  afraid  to  take  out  in- 
surance for  three  years  at  one  time  on  personal  property  as  the 
insurance  on  household  goods  may  be  transferred  to  a  new 
location  by  simply  getting  a  permit  from  the  insurance  com- 
pany, without  extra  charge.  In  the  same  way,  if  a  house 
that  is  insured  is  sold,  the  insurance  may,  by  permit  from  the 
company,  be  transferred  to  the  buyer. 

The  standard  insurance  policies  contain  certain  provisions 
in  regard  to  the  use  of  the  property,  etc.  that  must  be  ob- 
served or  the  insurance  may  be  of  no  effect.  For  this  reason, 
every  person  insuring  property  should  read  the  most  impor- 
tant provisions  of  the  policy.  Rules  in  reference  to  altera- 
tions, change  in  the  use  of  the  property,  as,  from  a  dwelling 
house  to  a  boarding  house,  the  giving  of  notice  to  the  com- 
pany in  the  case  of  vacating  it,  the  storing  of  gasoline,  etc. 
are  important  provisions  that  should  be  understood. 

It  must  be  understood  that  in  case  of  a  fire  loss  the  amount 
of  the  insurance  is  simply  the  maximum  amount  that  the 
insurance  company  can  be  called  upon  to  pay.  If  there  is  a 
partial  loss,  the  insured  should  be  able  to  furnish  an  itemized 
statement  of  the  goods  destroyed  and  their  value.  It  is  al- 
most as  important  in  the  case  of  a  total  loss,  as,  in  all  but  a 
few  states,  the  insurance  company  can  demand  an  itemized 
statement  of  the  loss  even  when  it  is  total.  The  advantage 
of  having  a  complete  record  in  inventory  form  can  readily 
be  seen. 

Whenever  the  family  maintains  a  safety  deposit  box  at 
some  bank,  the  inventory,  fire  and  life  insurance  policies,  and 
any  other  valuable  papers  should  be  kept  there  instead  of  at 


78     HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

home.  They  may  be  examined  at  any  time  during  banking 
hours  and  are  safe  at  all  times.  The  cost  is  not  great  and  it 
may  save  many  times  the  expense  if  valuable  papers  are  saved 
from  destruction. 

Exercise  18.  a.  Make  an  inventory  of  the  articles  in  your 
home  in  the  living  room,  dining  room,  and  kitchen  at  the  cost 
price  of  each.  Find  the  present  value  of  each  article  and 
of  each  room  by  deducting  7%  on  the  furniture,  8%  on 
rugs,  10%  on  carpets,  20%  on  curtains,  5%  on  piano,  6%  on 
pictures,  5%  on  books,  10%  on  china,  and  15%  on  kitchen 
utensils  for  each  year  that  the  article  has  been  used. 

b.  Make  an  inventory  of  the  articles  in  your  cooking  room. 
Your  teacher  will  assist  you  in  finding  the  values  and  in  taking 
off  the  depreciation. 

Exercise  19.  a.  The  household  goods  of  a  family  are  in- 
ventoried at  $930.  They  are  insured  for  two-thirds  of  their 
value  for  three  years  at  75c  for  each  $100  in  the  risk.  Find 
the  amount  of  the  premium. 

b.  A  building  cost  $4000  three  years  ago.  The  annual  de- 
preciation taken  off  has  been  3%  of  the  cost.  If  the  property 
is  insured  for  two-thirds  of  its  present  value  at  38c  per  $100 
for  one  year,  and  a  charge  of  one  dollar  is  made  for  writing  the 
policy,  what  is  the  cost  of  the  insurance  ? 


CHAPTER  XIII 

THE   FAMILY  INCOME   AND   FINANCIAL   STATEMENTS 

THE  various  methods  of  keeping  family  accounts  that 
have  been  explained  give  a  good  view  of  the  expenditures  and 
their  comparison  with  the  family  budget  from  month  to 
month.  But  at  the  end  of  the  year  this  information  should 
be  presented  in  statement  form  so  as  to  show  at  a  glance 
the  income  and  expenses  for  the  year.  This  statement  is 
called  a  statement  of  Income  and  Expenses.  It  is  also 
necessary  for  the  housekeeper  to  know  what  the  real  value  of 
the  home  plant  is.  This  is  found  by  making  a  statement 
of  Assets  and  Liabilities. 

Before  explaining  these  statements  it  will  be  necessary  to 
explain  the  meaning  of  certain  terms  to  be  used.  In  the  first 
place,  a  statement  of  Income  and  Expenses  is  not  the  same 
as  the  summary  of  receipts  and  expenditures  used  with  the 
columnar  cash  book  in  Chapter  VII.  The  difference  between 
a  statement  of  receipts  and  a  statement  of  income  is  that  the 
statement  of  receipts  must  include  everything  received,  from 
whatever  source ;  while  a  statement  of  income  should  include 
only  what  was  received  during  the  year  as  a  result  of  labor 
or  of  money  earned  during  the  year.  The  principal  items 
of  income  of  a  household  are  wages  for  the  regular  employ- 
ment, amounts  received  for  special  work,  interest  on  savings 
or  from  investments,  rent  received  from  property  owned, 
rent  of  rooms  and  amounts  received  from  boarders,  income 

79 


80     HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

from  garden,  poultry,  etc.  Money  drawn  from  a  savings 
account  that  represents  savings  of  previous  years  or  of  the 
current  year  is  not  income  although  it  is  a  receipt  of  cash. 
Neither  is  money  borrowed  from  the  bank  or  from  an  indi- 
vidual a  part  of  the  income  although  it  is  a  receipt  of 
cash. 

A  distinction  must  also  be  made  between  expenditures  and 
expenses.  Everything  paid  out  is  an  expenditure  of  money, 
but  nothing  is  an  expense  unless  it  is  money  paid  out  that  is 
used  up  in  running  the  home.  A  payment  for  anything 
of  fixed  value  added  to  the  home  plant  or  an  expenditure  that 
is  still  represented  in  the  worth  of  the  home  plant  at  the  end 
of  the  year  is  not  an  expense.  For  example,  a  payment  of 
money  for  any  of  the  ordinary  expenses  of  the  budget,  such 
as,  payments  for  food,  rent  and  carfare,  fuel  and  light,  wash- 
ing and  cleaning,  miscellaneous  operating  expenses,  including 
interest  on  money  borrowed  to  pay  debts  or  to  pay  the  run- 
ning expenses,  payments  of  money  for  clothing  to  replace 
clothing  worn  out,  magazines  and  papers,  but  not  books, 
recreation,  church  and  benevolence,  and  health  is  an  expense 
of  running  the  household.  But  a  payment  of  money  for  a 
property,  for  furniture  or  furnishings,  for  books  and  musical 
instruments,  for  life  insurance,  for  investments,  and  for  sav- 
ings is  an  expenditure  but  not  an  expense.  Interest  paid  on 
property  purchased  or  on  a  piano  or  on  furniture  or  anything 
of  that  kind  is  often  considered  a  part  of  the  cost  of  the 
property  but  that  is  a  poor  method  of  treating  it.  If  property 
is  purchased  on  payments  with  interest,  the  use  of  the  prop- 
erty or  the  income  from  the  property  should  be  offset  by 
the  amount  paid  for  interest  on  the  property.  So  important 
is  this  that  it  would  not  be  considered  incorrect  to  charge  the 
interest  paid  on  property  bought  as  rent.  Interest  paid  on 


FAMILY  INCOME   AND  FINANCIAL  STATEMENTS      81 

furniture  or  musical  instruments  should  also  be  considered  an 
expense.  If  it  were  added  to  the  cost  of  the  article,  it  would 
make  the  cost  of  the  article  for  inventory  and  insurance  pur- 
poses greater  than  the  actual  value  of  the  article.  Interest  must 
be  paid  either  because  the  working  funds  are  not  sufficient  to 
purchase  what  is  desired  or  because  it  is  desired  to  leave  money 
in  a  savings  account  or  in  an  investment  rather  than  to  pay 
cash  for  the  article.  The  income  from  the  savings  or  from 
the  investment  would  offset  the  interest  on  the  article  pur- 
chased with  interest.  But  interest  paid  on  property  dur- 
ing the  construction  period  and  before  the  property  is 
ready  for  occupancy  may  be  considered  a  cost  of  the 
property. 

In  making  a  statement  of  Income  and  Expenses,  everything 
earned  during  the  year  must  be  used  whether  the  cash  has 
been  received  for  it  or  not,  so  long  as  the  claim  is  a  good  one. 
For  example,  suppose  that  A  is  employed  in  December  to 
do  some  special  work  at  night  in  addition  to  his  regular 
employment.  He  is  not  to  receive  payment  for  this  work 
till  it  is  entipely  completed.  If  it  is  not  completed  by  the  end 
of  the  year,  he  will  not  receive  payment  for  his  work  till  the 
next  year,  but  a  fair  estimate  of  the  value  of  the  work  already 
done  should  be  included  in  the  income.  In  the  same  way, 
interest  on  an  investment  earned  but  not  yet  received  should 
be  computed  till  the  end  of  the  year,  and  the  amount  used 
as  a  part  of  the  income.  Also  when  insurance  is  paid  on  fur- 
niture or  property  for  more  than  a  year  at  a  time,  the  unex- 
pired  insurance  should  be  considered  as  an  asset  and  not  as 
an  expense.  It  will  be  seen  from  these  explanations  that  the 
income  may  be  more  than  the  actual  cash  received  or  it  may 
be  less. 

In  the  same  way,  any  expense  incurred  during  the  year 


82      HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

must  be  considered  an  expense  of  the  year,  no  matter  whether 
cash  has  been  paid  for  it  or  not.  If,  at  the  end  of  the  year, 
the  family  owes  a  doctor's  or  dentist's  bill,  or  a  bill  for  gro- 
ceries or  meat,  it  must  be  added  to  the  expenses  already  paid 
to  find  the  real  expenses  for  the  year.  Income  for  the  year 
earned  but  not  yet  received,  and  expenses  for  the  year  not  yet 
paid  are  called  by  bookkeepers  accrued  inventories. 

In  addition  to  these  expenses  a  proper  statement  of  ex- 
penses must  include  a  fair  charge  for  depreciation  on  furni- 
ture, musical  instruments,  and  on  real  property.  Clothing 
must  be  replaced  so  often  that  it  is  usually  best  to  revalue  it 
and  consider  a  large  part  of  the  money  expended  for  clothing 
each  year  as  an  expense  instead  of  attempting  to  take  a 
depreciation  on  it.  In  the  last  chapter  the  method  of  taking 
the  household  inventory  was  explained  and  the  deduction 
from  year  to  year  for  depreciation  was  shown.  Care  must 
be  taken  in  finding  the  depreciation  for  the  year  not  to  include 
in  the  value  to  be  deducted  from  last  year's  value  any. new 
articles  purchased  during  the  year.  For  example,  in  the 
illustration  on  page  75,  to  find  the  depreciation  for  the  year 
1917,  the  total  inventory  for  1917,  of  $208.70,  should  be  les- 
sened by  the  value  of  the  new  article  purchased  during  the 
year,  $19.50,  leaving  a  difference  of  $189.20,  the  value  of  the 
articles  on  hand  from  1916.  The  depreciation  for  1917,  is 
then,  $208.40,  the  value  Dec.  31,  1916,  less  $189.20  or 
$19.20. 

The  excess  of  income  over  expenses  is  surplus ;  but  if  the 
expenses  exceed  the  income,  the  excess  is  called  a  deficit.  A 
model  statement  of  Income  and  Expenses  will  now  be  made 
out  as  it  would  be  made  out  from  the  accounts  kept  and  the 
accrued  inventories  and  inventories  of  furniture  and  property 
found  by  taking  inventory. 


FAMILY   INCOME  AND   FINANCIAL  STATEMENTS     83 


STATEMENT  OF  INCOME  AND  EXPENSES  FOR  THE  YEAR  ENDING 
DEC.  31,  19— 


INCOME 

Salary 

Special  Work,  Earned  but  not  received 

Interest : 

On  Savings 

On  Investments 
Total  Income 


$  3.86 
18.00 


EXPENSES 


Food 

Rent  and  Car  fare 
Fuel  and  Light,  Paid 
Fuel  and  Light,  Unpaid 
Washing  and  Cleaning 
Miscellaneous  Operating 

Expenses,  Paid 
Less  unexpired  Insurance 
Clothing 

Magazines  and  Papers 
Recreation 

Church  and  Benevolence 
Health,  Paid 

Health,  Unpaid  Doctor's  Bill 
Depreciation  on  Furniture 
Total  Expenses 
Surplus 


$80.50 
15.00 


71.90 
3.00 


22.50 
15.00 


$1500.00 
27.00 
21.86 


$  372.50 
295.00 

95.50 
67.25 


68.90 
225.00 
10.50 
44.25 
18.00 

37.50 
38.00 


$1548.86 


1272.40 
>  276.46 


This  surplus  is  not  necessarily  cash,  but  may  be  in  the  form 
of  furniture,  real  property,  investments,  etc. 

Before  studying  the  statement  of  Assets  and  Liabilities, 
the  terms  assets  and  liabilities  must  be  explained.  A  family 
asset,  also  called  a  resource,  is  anything  of  value  owned  by 
the  family  or  anything  owed  to  the  family.  Cash,  furniture, 
real  property,  stocks  and  bonds,  etc.  are  property  assets  that 


84     HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

represent  something  of  value  owned  by  the  family.  A  debt 
due  the  family  because  of  some  labor  performed,  an  amount 
owed  to  the  family  because  of  a  sale  to  some  one  on  account, 
or  a  loan  to  some  one  either  on  personal  security  or  on  a  note 
are  assets  because  something  is  owed  to  the  family.  A  family 
liability  is  a  debt  owed  by  the  family.  It  may  be  for  the 
running  expenses  of  the  family,  or  it  may  be  for  some  furni- 
ture or  property  bought  by  the  family. 

A  distinction  must  be  made  between  a  payment  of  money 
for  an  asset  and  for  an  expense.  Money  paid  out  for  a  house 
and  lot,  for  addition  to  the  building,  for  interest  on  money 
borrowed  during  the  construction  period  only,  and  for  any 
part  of  a  betterment  that  adds  to  the  value  of  the  property 
is  a  part  of  the  cost  of  the  asset.  But  payments  for  repairs, 
for  taxes  and  insurance  are  expenses  of  the  property.  The 
method  of  treating  interest  on  deferred  payments  has  already 
been  explained.  In  the  same  way,  the  cost  of  furniture  is 
an  asset,  but  the  cost  of  repairs  and  the  cost  of  interest  on 
installment  purchases  is  an  expense. 

Life  insurance  is  an  asset,  although  a  part  of  each  premium 
paid  is  really  an  expense  of  carrying  the  insurance,  but  it  is 
difficult  to  estimate  the  expense  value  and  the  asset  value 
because  of  the  various  kinds  of  insurance  and  the  difference 
in  the  rates  of  insurance  charged.  Every  insurance  com- 
pany will  furnish  a  table  of  "  surrender  values  "  which  is 
really  the  cash  value  of  the  policy.  Some  would  consider 
that  as  the  asset  value  to  the  family,  but  that  is  a  very  con- 
servative estimate  as  the  value  to  the  family  is  really  more 
than  that. 

Each  year's  statement  will  show  as  a  net  result  of  the  state- 
ment either  a  surplus  or  a  deficit.  If  it  is  a  surplus  it  should  be 
shown  as  an  item  separate  from  the  accumulated  surplus  of 


FAMILY   INCOME  AND  FINANCIAL  STATEMENTS      85 

previous  years.  If  it  is  a  deficit,  it  should  be  shown  as  a  sub- 
traction from  the  surplus  of  previous  years. 

An  article  or  property  bought  on  the  installment  plan  is 
valued  at  what  has  been  paid  on  it,  but  that  does  not  properly 
show  the  entire  value  of  the  property  and  what  is  still  owed 
on  it.  So,  instead  of  simply  entering  as  an  asset  the  amount 
paid  on  the  article  or  property,  the  total  contract  cost,  exclu- 
sive of  interest,  should  be  shown  as  an  asset  and  the  amount 
still  owed  as  a  liability. 

A  model  statement  of  Assets  and  Liabilities  will  now  be  given. 


STATEMENT  OF  ASSETS  AND  LIABILITIES 
Dec.  31,  19— 


ASSETS 


Life  Insurance 

Furniture  and  Furnishings 

Piano 

Clothing 

Municipal  Bonds 

Unexpired  Insurance  (Fire) 

Cash 

In  Savings  Bank 

In  Commercial  Account 


$22.30 
32.15 


LIABILITIES 

To  Others : 

C.  N.  Carter  Co.  For  piano 
J.  A.  Brock  For  coal 

D.  L.  Scott  For  doctor's  bill 
Total  Liabilities  To  Others 
Surplus : 

Previous  Years 
Current  Year 


$115.25 

857.50 

350.00 

115.75 

306.00 

3.00 

54.45 


$250.00 
15.00 
15.00 


$1245.49 
276.46 


$1801.95 


$  280.00 
$1521.95 


86      HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

Exercise  20.  The  L.  N.  Griffin  family  during  the  current 
year  had  an  income  of  $1200  from  salary,  $65  from  special 
work,  $25  of  which  has  not  yet  been  received,  $10.50  interest 
on  savings,  and  $60  from  the  rent  of  a  room.  The  family 
expenditures  were  as  follows  :  Food,  $315 ;  Fuel  and  Light, 
$93.50 ;  Washing  and  Cleaning,  $34 ;  Miscellaneous  Operat- 
ing Expenses,  $61.75;  Clothing,  four-fifths  of  which  was  an 
expense,  $225,  Magazines,  $9.50 ;  Recreation,  $42.50 ;  Church 
and  Benevolence,  $21.50;  Health,  $72.50;  Life  Insur- 
ance, $46.50;  Savings,  $77.50;  Property,  $330;  Taxes  on 
Property,  $38.75.  The  property  was  bought  from  the 
Hamilton  Realty  Co.  at  a  cost  of  $3450,  $475  of  which  has 
been  paid,  including  the  amount  paid  this  year.  Of  the 
amount  paid  this  year,  $147.50  was  for  interest.  The  family 
owes  H.  I.- Drew  for  a  grocery  bill  amounting  to  $18.75  and 
the  Gordon  Furniture  Co.  for  furniture  amounting  to  $37.50. 
The  unexpired  fire  insurance  on  the  house  and  furniture 
amounts  to  $16.  The  life  insurance  policy  is  worth  $218.20, 
the  furniture,  etc.,  $736.80,  and  the  clothing,  $144.75.  Allow 
a  depreciation  of  $75  on  furniture  and  furnishings.  There 
is  cash  in  the  savings  bank  amounting  to  $23.50  and  cash 
in  the  checking  account  and  on  hand  of  $16.80.  The  surplus 
of  previous  years  amounts  to  $1333.55. 

Make  statements  of  Income  and  Expenses  and  of  Assets 
and  Liabilities,  dated  December  31,  of  the  current  year. 

QUESTIONS  FOR  DISCUSSION 

1.  Why  is  it  desirable  to  have  a  household  inventory  ? 

2.  What  does  a  household  inventory  include?     How  should  it  be 
taken? 

3.  Is  it  necessary  in  taking  the  household  inventory  to  make  any 
allowance  for  depreciation?   Why? 


FAMILY  INCOME  AND  FINANCIAL  STATEMENTS       87 

4.  At  what  value  should  articles  bought  on  the  installment  plan  and 
not  fully  paid  for  be  listed  ? 

5.  What  is  meant  by  the  fire  insurance  premium  ?    Upon  what  does 
the  rate  depend  ?     How  is  it  stated  ? 

6.  Is  there  any  advantage  in  insuring  for  more  than  one  year  at  a 
time  ?     Explain. 

7.  What  are  some  of  the  most  important  provisions  of  the  standard 
fire  insurance  policy  ? 

8.  If  a  family  moves  from  the  place  where  the  furniture  has  been 
insured,  does  it  forfeit  its  insurance?     Explain. 

9.  What  does  the  insurance  company  require  in  case  of  loss? 

10.  What  is  a  statement  of  Income  and  Expenses  ? 

11.  Explain  how  income  differs  from  receipts  of  cash. 

12.  Explain  how  expenses  differ  from  expenditures  of  cash. 

13.  In  making  a  statement  of  Income  and  Expenses,  what  should 
be  included  that  is  not  a  part  of  the  cash  received  and  paid  out  ?     Why  ? 

14.  What  distinction  should  be  made  between  a  payment  for  an 
expense  and  one  that  is  a  part  of  the  cost  of  the  asset  ? 

16.  What  should  a  statement  of  Assets  and  Liabilities  include? 

16.  What  is  meant  by  a  surplus  ?     How  is  it  found  ? 

17.  What  is  meant  by  a  deficit  ?     How  is  it  found  ? 

18.  How  is  the  correctness  of  these  two  statements  proved  ? 


CHAPTER  XIV 

HOUSEHOLD   ACCOUNTING   SET 

THE  Frank  A.  Williams  family  consists  of  Mr.  Williams, 
his  wife,  and  two  children,  Robert,  aged  nine  years,  and 
Mabel,  aged  six  years.  Mr.  Williams  is  a  salesman  in  a 
store  and  earns  $100  per  month.  They  have  decided  upon 
a  distribution  of  the  family  budget  as  follows:  food,  21%; 
payment  on  property,  25% ;  car  fare,  2% ;  fuel  and  light, 
6%;  washing  and  cleaning,  1%;  miscellaneous  expenses, 
6% ;  clothing,  16% ;  books  and  magazines,  2J% ;  recrea- 
tion, 3% ;  church  and  benevolence,  1  J% ;  health,  2J% ; 
furniture  and  furnishings,  4%  ;  life  insurance,  5% ;  and  the 
balance,  savings. 

Use  a  columnar  cash  book  like  the  one  in  Chapter  VI,  with 
these  exceptions:  instead  of  using  the  second  distributive 
column  for  Rent  and  Car  Fare,  head  it  Interest  and  Car  Fare ; 
add  a  column  after  Savings  for  Property.  Enter  the  follow- 
ing transactions  that  are  cash  in  the  cash  book  and  any  credit 
purchases  on  credit  cards.  Find  the  monthly  budget  allow- 
ance for  each  purpose  in  dollars  and  cents  and  enter  it  at  the 
top  of  each  column.  Find  the  cash  balance  on  the  4th,  llth, 
18th,  25th,  and  31st. 

The  cash  balance,  December  1,  was  $47.80,  which  was  made 
up  of  the  following  unexpended  balances :  miscellaneous 
expenses,  $13.15;  clothing,  $18.75;  health,  $9.50;  and 
furniture  and  furnishings,  $11.50.  The  amount  expended 
for  fuel  was  $5.10  over  the  budget  allowance. 

88 


HOUSEHOLD  ACCOUNTING  SET  .     89 

Instead  of  paying  rent  the  family  is  buying  a  duplex  flat, 
occupying  the  down-stairs  flat  and  renting  the  up-stairs  flat 
for  $22.50.  The  income  from  the  up-stairs  flat,  together  with 
$25  from  the  monthly  salary  is  paid  on  the  property,  making 
a  total  payment  per  month  of  $47.50.  Of  this  amount 
$20  is  interest  on  the  deferred  payments  and  the  balance, 
$27.50,  is  a  payment  on  the  property. 

TRANSACTIONS 

December    1.   Enter  the  cash  balance  of  $47.80. 

1.  Received   the  rent  of  the   up-stairs  flat, 

$22.50 ;  wages,  $100. 

2.  Paid  for  car  tickets,  $1 ;   meat,  23c ;   vege- 

tables and  fruit,  20c ;  shoes  for  Robert, 
$1.75. 

3.  Paid  for  flour,  $2.25 ;    butter,  56c ;    maga- 

zines, $2.50. 

4.  Paid  for  groceries,  $3.85 ;  meat,  52c ;  photo- 

play, 20c. 

5.  Paid  for  church,  20c. 

6.  Paid  for  meat,  24c ;  medicine,  50c ;  electric 

light   bulbs  to  replace   broken   ones, 
50c. 
8.   Paid  for  soap,  25c;  fruit,  15c;  meat,  30c. 

10.  Paid  on  property,  $47.50. 

Divide  this  up  into  the  expense  element 
and  the  asset  element. 

11.  Paid  for  suit  for  Mr.  Williams,  $22.50; 

shoes  for  Mabel,  $1.50;     meat,  50c; 
fruit,  25c. 

12.  Paid  for  church,  20c. 


90     HOUSEHOLD  ACCOUNTING  AND  ECOKOM 

December  14.  Paid  for  presents  for  the  children,  §. 

(Charge  this  to  Miscellaneous  Ex- 
penses.) Paid  for  butter,  60c;  meat, 
35c. 

15.  Paid  for  groceries,  $4.18 ;  life  insurance  de- 

posit, $5;   savings  deposit,  $4. 

16.  Paid  electric  fight  bfll,  $1.10;  doctor,  $2. 
18.  Bought  a  brass  bed  for  $2450  and  springs 

for  $6.75  of  the  Lyons  Furniture  Co.  for 
$5  down  and  $2  per  month  until  paid. 
Paid  $5  in  cash.  Open  a  credit  account. 

18.  Paid  for  meat,  62c;  fruit,  30c;  groceries,  90c. 

19.  Paid  for  church,  25c.      . 

20.  Paid  for  groceries,  $2.75 :    meat,  20c ;   hat 

for  Mrs.  WflKams,  $4.50. 

21.  Paid  for  car  tickets,  $1 ;  books,  $1.50;  gas 

bffl,  $1.35. 

23.  Paid  for  meat,  15c;    washing,  75c;    dress 

for  Mabel,  $1.75 ;  presents,  $2.75. 

24.  Paid  for  meat,  $1.10;  fruit,  40c;  groceries, 

75c. 

25.  Paid  for  theater,  $1. 

26.  Paid  for  church,  20c. 

27.  Paid  for  medicine,  35c;    hat  for  Robert, 

$1.25;  kitchen  utensils,  98c. 

29.  Paid  for  meat,  25c;    dentist,  $1.     Bought 

a  kitchen  range  of  the  City  Gas  Co.  for 
$21.50,  on  the  terms,  $1.50  down  and 
$2  per  month  until  paid.  Paid  81.50. 

30.  Paid  for  stationery   _  :amps.  IGc. 

31.  Paid  for  meat,  24c;  inilk  bill,  $1.95  ;  butter, 

30e. 


HOUSEHOLD  ACCOUNTING  SET  91 

• 

Find  the  total  of  each  distributive  column  and  prove  the 
total  of  all  these  columns  with  the  sum  of  the  Total  Pay- 
ments column. 

A  summary  of  the  cash  payments  for  the  year  up  to  Decem- 
ber 1  shows  payments  as  follows :  food,  $231 ;  interest  and 
car  fare,  $242 ;  fuel  and  light,  $71.10 ;  washing  and  cleaning, 
$11;  miscellaneous  expenses,  $72.85;  clothing,  $157.25; 
books  and  magazines,  $27.50 ;  recreation,  $33 ;  church  and 
benevolence,  $16.50;  health,  $18;  furniture  and  furnish- 
ings, $32.50 ;  life  insurance,  $55 ;  savings,  $49.50 ;  property, 
$302.50.  Make  a  summary  for  the  year  by  using  these 
amounts  and  the  results  of  the  December  transactions. 

The  regular  income  of  $100  per  month  and  rent  for  $22.50 
has  been  received  for  each  of  the  eleven  months  up  to  Decem- 
ber 1.  Interest  on  savings  amounted  to  $1.05. 

An  inventory  of  household  goods,  including  the  articles 
bought  on  installments,  totals  $736.50,  on  which  a  deprecia- 
tion of  $31  is  taken.  Four-fifths  of  the  cost  of  clothing  for 
the  year  is  considered  an  expense  and  the  present  value  of  the 
clothing  is  considered  as  $101.25.  The  magazine  expense 
is  $12.50.  Life  insurance  is  worth  $117.50.  The  flat 
building  was  bought  the  previous  year  for  $5750,  on  which 
$625  was  paid  prior  to  January  1  of  this  year.  Unexpired 
insurance  on  the  house  and  on  the  furniture  amounts  to 
$19.25.  The  family  owes  G.  Ray  a  bill  for  repairs  to  the 
house  of  $23.50  and  the  balance  on  each  of  the  two  credit 
purchases  made  this  month.  The  taxes  have  not  yet  been 
paid  and  amount  to  $48.75.  The  accumulated  surplus  of 
previous  years  amounts  to  $1859.68. 

Make  statements  of  Income  and  Expenses  and  of  Assets 
and  Liabilities,  dated  December  31. 


CHAPTER  XV 

CLUB   AND   SOCIETY  ACCOUNTS 

IN  keeping  household  accounts  it  was  possible  to  use  a  cash 
book  with  columns  for  distributing  the  payments  because  the 
accounts  for  any  family  vary  but  little  from  month  to  month. 
A  variation  of  this  method  was  given  in  Chapter  X  in  which, 
instead  of  using  a  columnar  cash  book  with  distributive  col- 
umns, a  two-column  cash  book  and  a  card  ledger  were  used. 

But  in  keeping  the  accounts  of  a  club  or  society,  the  items 
vary  greatly  from  month  to  month  and  the  accounts  must 
be  kept  so  as  to  make  it  possible  to  present  more  elaborate 
reports  and  to  prove  up  the  work  oftener.  The  books  of  entry 
that  should  be  used  are  the  journal  and  the  cash  book.  With 
these,  the  book  of  accounts,  the  ledger,  is  used.  The  treas- 
urer of  a  club  or  society  or  fund  should  know  how  to  keep  the 
accounts  by  double  entry.  The  same  method  is  used  by  the 
bookkeeper  of  a  business  except  that  a  sales  book  and  a  pur- 
chase book  are  also  necessary. 

There  is  nothing  mysterious  about  double  entry,  in  fact 
the  student  has  already  made  use  of  the  principle  but  has  not 
known  it  by  that  name.  In  double  entry  every  transaction 
has  a  double  effect.  If  it  is  a  cash  transaction,  Cash  may  be 
received,  which  is  one  effect,  and  the  thing  for  which  it  is 
received,  as,  Wages,  or  Interest,  or  Income,  Real  Property, 
is  the  other  effect.  Or  cash  may  be  parted  with,  which  is 
one  effect,  and  the  thing  received  or  the  use  or  service  re- 
ceived, such  as  Food,  or  Clothing,  or  Rent,  or  Washing,  the 

92 


CLUB  AND  SOCIETY  ACCOUNTS  93 

other  effect.  In  the  first  illustration  we  say  that  Cash  is 
debited  because  it  is  received  and  that  Wages,  or  Interest, 
or  Income,  Real  Property  is  credited  because  it  represents 
the  account  of  the  thing  or  service  for  which  the  cash  was 
received.  In  the  second  illustration,  Food,  or  Clothing,  or 
Rent,  or  Washing  is  said  to  be  debited  because  either  some- 
thing is  received,  as  in  the  case  of  Food  or  Clothing,  or  some 
use  or  service  is  received,  such  as,  Rent  or  Washing.  As 
we  have  already  learned,  then,  cash  received  is  a  debit  to  Cash 
and  a  credit  to  some  account  named ;  cash  paid  out  is  a  debit 
to  some  account  named  and  a  credit  to  Cash.  This  gives  a 
double  effect  for  every  transaction. 

There  is  one  other  important  principle  of  the  use  of  the 
cash  book  and  that  is  the  principle  of  economy  in  posting. 
In  keeping  the  accounts  of  a  club  or  society  or  fund,  it  is  best 
to  use  a  two-page  cash  book,  as  the  transactions  can  be  re- 
corded and  explained  more  completely  in  it.  If  cash  is  re- 
ceived, it  must  be  entered  on  the  Cash  Receipts  (left-hand) 
side  and  the  name  of  the  account  for  which  the  cash  was  re- 
ceived must  be  written,  as  Membership  Dues,  Fines,  Con- 
cert, Bazaar,  or  anything  else  that  brings  in  cash.  Accounts 
must  be  opened  up  in  the  ledger  under  these  or  similar  head- 
ings and  each  item  posted  to  the  credit  side  of  that  account 
in  the  ledger.  Each  item  has  also  a  debit  effect,  that  of 
Cash,  but  it  is  not  necessary  to  post  each  item  to  the  Cash 
account  but  simply  the  total  cash  received  during  the  month, 
exclusive  of  any  cash  balance  brought  over  from  the  pre- 
vious month.  In  the  illustration  on  pages  98  and  99,  Mem- 
bership Dues,  etc.  must  be  credited  in  the  ledger  account, 
but  the  total  cash  received  for  the  month,  $222.50,  is  posted 
but  once  to  the  debit  of  Cash. 

The  same  principle  is  true  of  the  payments  side  of  the  cash 


94     HOUSEHOLD  ACCOUNTING   AND   ECONOMICS 

book.'  Suppose  that  cash  is  paid  out.  It  must  be  entered 
on  the  Cash  Payments  (right-hand)  side  and  the  name  of 
the  account  for  which  the  payment  was  made  must  be  written 
down,  as  Rent,  Postage,  Cleaning,  Salary,  etc.  Each  of  these 
items  must  then  be  posted  to  the  debit  side  of  the  account 
named.  Each  item  has  a  credit  effect  also,  that  of  Cash, 
but  it  is  necessary  to  post  this  effect  but  once,  in  total,  to  the 
credit  side  of  the  ledger  account.  A  study  of  the  cash  book 
illustrated  on  pages  98  and  99  and  its  posting  to  the  ledger 
on  pages  100  and  101  will  make  this  principle  plain. 

One  other  kind  of  transaction  must  be  explained.  In 
keeping  household  accounts,  purchases  on  account  or  debts 
incurred  were  entered  as  supplementary  or  memorandum 
accounts  unless  they  were  settled  in  full  monthly  when 
nothing  but  the  bills  and  statements  were  used  as  a  record 
of  the  purchase  until  payment  was  made.  But  in  keeping 
accounts  by  the  complete  double  entry  system,  these  must 
be  entered  in  the  journal  as  a  debit  to  some  account  that 
stands  for  the  thing  received  and  as  a  credit  to  the  creditor 
that  furnished  the  article.  For  example,  a  purchase  of  a 
piano  from  the  B.  I.  Lee  Co.  on  account  or  on  installments, 
for  $400,  would  be  entered  as  a  debit  to  the  Piano  account 
and  a  credit  to  the  B.  I.  Lee  Co.,  in  the  following  form : 

Sept.  15,  19— 

Piano  Star    upright,    walnut    400 

To  B.  I.  Lee  Co.     case,    on    the    terms  :  400 

$40  down  and  $20  pel- 
month,  on  the  15th 
of  each  month. 

This  entry  would  be  posted  to  the  debit  of  the  Piano  ac- 
count in  the  ledger  and  to  the  credit  of  the  B.  I.  Lee  Co.'s 


CLUB  AND  SOCIETY  ACCOUNTS 


95 


account  in  the  ledger.  When  the  first  payment  of  $40  is 
made  or  a  subsequent  payment  of  $20,  the  payment  would 
be  entered  on  the  Cash  Payments  side  of  the  cash  book  in  the 
following  form : 


Sept. 


15 


B.  I.  Lee  Co. 


First  payment,  piano 


40 


This  would  be  posted  to  the  debit  of  the  B.  I.  Lee  Co.'s  ac- 
count and  would  cause  a  reduction  of  that  much  from  the 
purchase  price  which  has  been  recorded  on  the  credit  side. 
Nothing  should  be  entered  in  the  journal  except  non-cash 
transactions. 

Let  us  now  suppose  that  Miss  Alice  E.  Harmon  is  elected 
treasurer  of  a  newly  organized  society,  called  the  Community 
Service  Association.  The  constitution  of  the  association  pro- 
vides for  annual  membership  dues  of  $3.  The  association 
is  formed  with  a  charter  membership  of  twenty  members, 
each  of  whom  pays  the  membership  fee  of  $3.  The  treasurer 
would  enter  this  on  the  Cash  Receipts  side  as  follows  : 


Oct. 


1 


Membership 

Dues 


20  members,  as  follows  : 
(Names  detailed  or  en- 
tered in  a  special  Mem- 
bers book.) 


60 


The  association  then  votes  to  rent  a  room  for  a  library  at 
$20  per  month  and  the  treasurer  is  authorized  to  make  the 
payment.  The  treasurer  has  opened  up  a  checking  account 
in  the  First  National  Bank  and  deposited  the  $60  that  she 
has  received.  When  she  opened  up  the  account  and  signed 
the  signature  card,  she  was  careful  to  sign  the  name  of  the 
association  first,  followed  by  her  name  as  treasurer,  in  the 
following  form : 


96     HOUSEHOLD  ACCOUNTING   AND  ECONOMICS 


Community  Service  Association 
by  Alice  E.  Harmon,  Treas. 

She  then  draws  a  check  for  $20,  payable  to  the  owner  of 
the  building  in  which  the  room  is  located,  J.  A.  Terrel,  and 
writes  on  the  check  below  the  amount  in  words  and  to  the 
left  of  the  signature,  "  For  rent  of  room,  318  State  St.,  to  Nov. 
1,  19 — ."  She  then  enters  this  on  the  Cash  Payments  side 
of  the  cash  book,  as  follows : 


Oct. 


1 


Rent 


To  Nov.  1,  19_ 


20 


The  association  also  authorized  the  purchase  of  furniture 
for  the  equipment  of  the  library  room.  This  was  purchased 
from  the  Harris  Furniture  Co.,  for  $175,  on  the  terms,  cash 
$25  and  the  balance  on  account,  90  days.  The  treasurer 
enters  the  purchase  of  furniture  in  the  journal,  as  illustrated 
on  page  97. 

Then  she  writes  a  check  for  $25  and  enters  it  on  the  Cash 
Payments  side  of  the  cash  book,  as  follows : 


Oct. 


C.  Harris  Furniture  Co. 


On  account      25 


Each  of  these  entries  is,  of  course,  posted  to  the  proper  ac- 
count in  the  ledger.  These  illustrations  and  the  cash  book 
and  ledger  pages  following  should  give  the  student  a  good 
idea  of  how  the  entries  should  be  made  and  posted. 

At  the  end  of  each  month,  the  treasurer  must  prove  the 
posting  to  the  ledger.  As  we  have  seen,  each  debit  in  the 
journal  was  posted  to  the  debit  side  of  the  account  named  and 
each  credit  to  the  credit  side  of  the  account  named.  In  the 
cash  book,  the  double  entry  principle  was  maintained  by 
posting  the  total  of  the  Cash  Receipts  side  to  the  debit  of 


CLUB  AND  SOCIETY  ACCOUNTS 


97 


Cash,  and  each  item  to  the  credit  side  of  the  account  named, 
and  by  posting  the  total  of  the  Cash  Payments  side  to  the 
credit  side  of  Cash,  and  each  item  to  the  debit  side  of  the  ac- 
count named.  If  this  has  been  done  accurately,  the  treasurer 
has  posted  as  much  to  the  debit  side  of  the  ledger  as  to  the 
credit  side.  She  tests  this  by  making  a  trial  balance.  This 
is  done  by  listing  each  account  and  its  net  debit  or  net  credit 
amount.  It  is  a  net  debit  if  the  credit  side,  if  either,  is  less 
than  the  debit  side ;  it  is  a  net  credit  if  the  debit  side,  if  either, 
is  less  than  the  credit  side.  Most  of  the  accounts,  however, 
have  items  on  one  side  only.  The  sum  of  all  the  debit 
amounts  must  equal  the  sum  of  all  the  credits  if  the  posting 
has  been  done  to  the  right  side  of  the  ledger.  It  does  not, 
however,  prove  that  the  posting  has  been  done  to  the  right 
accounts,  but  that  can  be  guarded  against  by  care  in  posting 
to  the  right  headings.  A  trial  balance  of  the  ledger  is  illus- 
trated on  page  102. 


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98     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 


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CLUB   AND   SOCIETY   ACCOUNTS 


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100     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 
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CLUB  AND  SOCIETY  ACCOOKT&  '  101 

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102    HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 


LEDGER 
PAGE 


TRIAL  BALANCE,  OCT.  31,  19 


1 

Membership  Dues 

$150 



1 

Library  Fees 

25 

— 

1 

Tag  Day  Sale 

45 

— 

1 

Library  Fines 

2 

50 

1 

Cash 

$27 

50 

1 

Rent 

20 

— 

1 

Library  Furniture 

187 

— 

2 

C.  Harris  Furniture  Co. 

150 

— 

2 

Cleaning 

4 

— 

2 

Books 

97 

50 

2 

J.  L.  Carter  Book  Co. 

26 

— 

2 

Postage 

5 

— 

2 

Library  Equipment 

17 

50 

2 

Salaries 

40 

— 

$398 

50 

$o98 

50 

At  the  end  of  each  month  the  treasurer  should  make  a  re- 
port of  receipts  and  payments  and  of  the  bills  outstanding. 

STATEMENT  OF  RECEIPTS  AND  PAYMENTS  FOR  OCTOBER  19 


RECEIPTS 


Membership  Dues 

$150.00 

Library  Fees 

25.00 

Tag  Day  Sale 

45.00 

Library  Fines 

2.50 

Total  Receipts 

PAYMENTS 

Library  Furniture 

37.00 

Library  Equipment 

17.50 

Books 

71.50 

Rent 

20.00 

Cleaning 

4.00 

Postage 

5.00 

Salaries 

40.00 

Total  Payments 

Cash  Balance 

$222.50 


195.00 
$  27.50 


CLUB  AND   SOCIETY  ACCOUNTS  103 

UNPAID   BILLS 

C.  Harris  Furniture  Co.  $150.00 

J.  L.  Carter  Book  Co.  26.00 

Electric  Light  Bill  3.65 

Fuel  Bill  5.75 

Total  Unpaid  Bills  $185.40 

It  is  usual  not  to  enter  small  bills  for  light,  fuel,  etc.,  until 
they  are  paid.  The  treasurer  has  received  the  electric  light 
and  fuel  bills  but  will  not  enter  them  until  they  are  paid. 

At  the  end  of  the  year  the  treasurer  should  make  out  state- 
ments of  Income  and  Expenses  and  of  Assets  and  Liabilities. 
These  would  be  the  same  in  form  and  principle  as  those  given 
for  the  family  in  Chapter  XIII. 

Exercise  21.  a.  Use  a  two-page  cash  book  and  a  journal 
as  books  of  entry  and  enter  the  following  transactions. 

Miss  Ella  Rice  has  been  elected  treasurer  of  the  Women's 
Club.  The  former  treasurer  turns  over  to  her  a  balance, 
on  Nov.  1,  of  $63.75. 

November    1.   Paid  rent  of  club  rooms  to  December  1,  $25. 

2.   Received  dues  from  30  members  at  $2  each,  $60. 
4.   Bought  a  carpet  for  the  club  rooms,  of  Evans  &  Co., 
for  $58.50,  on  account. 

6.  Receipts  of  Club  Concert,  $157.50. 

7.  Paid  for  rent  of  hall  for  concert,  $30 ;    male  quartet 

for  concert,  $25. 

Expenditures  that  result  from  some  special  income, 
such  as  this,  should  be  charged  to  the  income  ac- 
count so  that  the  account  will  show  the  net 
amount  made.  On  the  credit  side  of  the  Club 
Concert  account  will  be  the  gross  receipts  from 
the  concert;  on  the  debit  side  of  this  account 
will  be  the  expenses  of  the  concert.  The  dif- 
ference will  show  the  net  income  from  the  con- 
cert. 


104      HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

November    8.   Paid  for  advertising  and  tickets  for  the  Club  Concert, 

$12.50. 

11.   Sold  4  doz.  chairs  at  $4  a  doz.  to  C.  L.  Minn,  for 
cash,  $16. 

11.  Bought  5  doz.  chairs  at  $12.75  a  doz.,  of  the  J.  A. 

Jackson  Co.,  on  account. 

12.  Paid  for  postage,  $1. 

13.  Paid  Evans  &  Co.,  on  account,  $40. 

14.  Paid  janitor  for  two  weeks,  $8. 

15.  Received  from  rent  of  rooms,  $5. 

16.  Bought  for  cash,  of  B.  L.  Ford,  4  pair  of  curtains  at 

$3.25,  $13. 
18.   Received  dues  from  7  members  at  $2  each,  $14. 

20.  Paid  for  2  tons  coal,  at  $6.25,  $12.50. 

21.  Paid  the  J.  A.  Jackson  Co.  for  the  purchase  of  chairs 

on  the  llth. 

22.  Receipts  from  the  Club  Bazaar,  $178.50. 

25.   Paid  expenses  of  the  bazaar,  as  follows  :  decorations^ 
$5.75 ;  lumber  and  carpenter  work,  $4 ;    adver- 
tising, $8.50;  music,  $10;  materials,  $10.75. 
Enter  this  in  the  same  way  as  for  the  expenses  for 
the  Club  Concert  on  the  7th. 

27.  Bought  a  piano  of  the  Howard  Piano  Co.,  for  $400 

Paid  $100  cash  and  agreed  to  pay  $25  per  month 
until  the  entire  amount  is  paid. 

28.  Contributed  to  charity,  $25. 

29.  Paid  janitor  for  two  weeks,  $10. 

Balance  the  cash  book. 

b.  Post  to  a  ledger  the  transactions  recorded  in  the  cash 
book  and  journal.     As  this  is  the  beginning  of  the  Club's 
year,  the  only  items  left  over  from  the  previous  year  that 
must  be  entered  first  in  the  ledger  before  posting  these  trans- 
actions are  as  follows :    Furniture  and  Furnishings,  $75.80 
on  the  debit  side ;   Cash,  $63.75  on  the  debit  side ;   and  Sur- 
plus, $139.55  on  the  credit  side. 

c.  Take  a  trial  balance  of  the  ledger  after  posting. 


CLUB  AND  SOCIETY  ACCOUNTS  105 

d.   Make  a  statement  of  Receipts  and  Payments  for  the 
month  of  November. 

QUESTIONS  FOR  DISCUSSION 

1.  How  does  the  keeping  of  club  and  society  accounts  differ  from 
the  keeping  of  household  accounts  ? 

2.  What  does  an  entry  on  the  cash  receipts  side  mean  when  keep- 
ing the  books  by  double  entry  ?     Explain. 

3.  What   does  an  entry  on  the  cash  payments  side  mean  when 
books  are  kept  by  double  entry  ? 

4.  How  should  an  entry  on  the  cash  receipts  side  of  the  cash  book 
be  posted  ?     On  the  cash  payments  side  ? 

5.  How  should  the  total  of  each  side  of  cash  be  posted  ? 

6.  How  should  a  purchase  on  account  be  entered  in  the  books  ? 

7.  How  should  a  payment  on  account  be  entered  ? 

8.  How  should  the  treasurer  of  a  club  or  society  open  up  an  ac- 
count at  the  bank  ? 

9.  In  what  way  may  the  treasurer  show  for  what  purpose  a  check  is 
written  ? 

10.  What  is  meant  by  a  trial  balance  ?     What  is  its  purpose  ? 

11.  How  should  a  trial  balance  be  taken  ?    What  does  it  prove  ? 

12.  What  statement  should  a  treasurer  make  monthly?    Explain 
how  it  is  made. 

13.  What  statements  should  be  made  by  the  treasurer  of  a  club 
or  society  at  the  end  of  the  year  ?    What  should  each  of  these  statements 
show? 


CHAPTER  XVI 

SAVINGS  BANK   ACCOUNTS 

IN  studying  the  family  budget  under  the  expenditures  for 
the  higher  life  we  found  that  the  savings  of  a  family  were  not 
measured  by  the  amount  left  in  the  bank  at  the  end  of  the 
year.  There  are  different  methods  of  saving,  the  most  im- 
portant of  which  are  the  savings  bank  account,  life  insurance, 
investments  in  stocks,  bonds,  and  mortgages,  and  invest- 
ments in  real  property.  Each  of  these  will  be  considered. 
In  this  chapter  how  to  open  up  savings  accounts  for  various 
purposes  and  how  to  do  business  with  a  savings  bank  will  be 
explained. 

Although  a  savings  fund  in  the  form  of  a  savings  bank  ac- 
count or  a  Postal  savings  deposit  does  not  earn  a  very  high 
rate  of  interest,  it  presents  the  best  possible  method  of  saving 
small  amounts  from  time  to  time  and  making  them  earn  some- 
thing. The  average  family,  if  it  saves  at  all,  must  do  so  by 
saving  small  amounts  regularly.  An  account  may  be  opened 
for  amounts  of  $1  or  more.  The  Postal  savings  department 
pays  2%  to  2i%  on  deposits.  The  average  savings  bank 
pays  3%  on  deposits. 

An  account  of  this  character  may  be  opened  up  in  a  Savings 
Bank  or  in  the  savings  department  of  some  commercial  bank. 
To  open  up  a  savings  account  the  depositor  must  sign  her 
name  on  a  signature  card  similar  to  the  one  used  in  opening 
up  a  commercial  account.  The  usual  information  called 

106 


SAVINGS  BANK  ACCOUNTS  107 

for  is  name,  residence,  age,  and  whether  married  or  single. 
As  in  the  case  of  opening  a  commercial  account  the  name 
must  be  signed -as  it  will  be  signed  when  drawing  out  money. 
The  same  precautions  must  be  observed  to  adopt  a  signature 
and  always  use  it.  In  signing  the  signature  card  a  married 
woman  should  use  her  legal  name :  for  example,  Helen,  the 
wife  of  John  Gross,  should  sign  her  name  Helen  Gross  and 
not  Mrs.  John  Gross. 

A  married  woman  may  open  up  a  savings  account  and  it 
can  be  drawn  out  by  no  one  else  but  herself.  Husband  and 
wife  may  open  up  a  joint  savings  account.  In  this  case  the 
names  of  both  the  husband  and  wife  must  be  signed  to  the 
signature  card.  Money  can  be  drawn  out  on  a  joint  account 
on  the  signature  of  either  party  to  the  joint  account. 

An  account  may  be  opened  up  by  the  parents  for  a  minor 
-  child.  This  is  an  excellent  way  to  provide  for  the  education 
of  the  child.  The  account  should  be  opened  up  in  the  name 
of  the  child.  The  signature  card  should  be  signed  in  the  name 
of  the  child  by  the  name  of  the  parent  opening  up  the  ac- 
count. For  example,  if  Mrs.  Gross  wished  to  open  up  an 
account  for  her  daughter,  Grace,  she  should  sign  the  signa- 
ture card  Grace  M.  Gross  by  Helen  Gross.  If  a  minor  opens 
up  an  account  personally  in  her  own  name,  she  may  draw  out 
the  money  herself. 

In  signing  the  signature  card,  the  depositor  agrees  to  the 
rules  and  regulations  of  the  bank  which  are  printed  in  the  pass 
book.  The  most  important  of  these  rules  are  as  follows  : 

1.  The  deposit  pass  bbok  must  be  presented  for  each  de- 
posit and  each  withdrawal. 

2.  Deposits  of  One  Dollar  or  more  will  be  received.     Many 
banks  will  not  receive  deposits  of  fractional  parts  of  a  dollar 
nor  allow  withdrawals  of  fractional  parts  of  a  dollar. 


108     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

3.  Deposits  made  on  or  before  the  fifth  day  of  the  month 
will  bear  interest  from  the  first  day  of  the  same  month. 
Deposits  made  after  the  fifth  will  not  bear  interest  until  the 
first  day  of  the  next  month. 

4.  Interest  is  paid  on  all  sums  on  deposit  for  at  least  one 
month  prior  to  the  interest  dates,  which  are  most  frequently 
January  1  and  July  1,  at  the  rate  of  3%  per  year. 

Banks  have  different  rules  in  reference  to  the  payment  of  interest. 
The  interest  dates  differ,  the  time  that  the  deposit  must  be  left  in  the 
bank  varies,  and  the  number  of  interest  dates  per  year  varies,  some 
computing  interest  four  times  a  year  instead  of  two.  The  rules  of  each 
bank  are  printed  in  the  pass  book  and  should  be  studied  by  the  de- 
positor. 

5.  Any  withdrawals  made  between  the  interest  dates  are 
deducted  from  first  deposits.     For  example,  suppose  that  a 
person  had  $25  deposited  in  a  savings  bank  account  on  Jan- 
uary 1  in  a  bank  that  computes  interest  on  January  1  and 
July  1.     The  following  deposits  and  withdrawals  have  been 
made:   February  3,  deposited  $30;    April  1,  deposited  $10; 
May  15,  withdrew  $15;   and  June  1,  deposited  $20.     The 
interest  to  be  credited  on  July  1  would  be  found  as  follows : 

First,  the  withdrawal  of  $15  on  May  15  would  be  sub- 
tracted from  the  amount  in  the  bank  January  1,  leaving  $10 
to  bear  interest  for  the  whole  period  of  six  months.  The 
interest  on  the  different  amounts  would  be  as  follows : 

The  interest  on  $10  for  six  months  at  3%  would  be  $.15 

The  interest  on  $30  for  five  months  at  3%  would  be  .38 

The  interest  on  $10  for  three  months  at  3%  would  be  .08 

The  interest  on  $20  for  one  month  at  3%  would  be  .05 

Total  interest  to  be  credited  on  July  1  $.66 

6.  The  bank  may  demand  a  notice  of  thirty  or  sixty  days 
before  an  amount  can  be  withdrawn  but  rarely  enforces  this 


SAVINGS  BANK  ACCOUNTS 


109 


SAVINGS  DEPOSIT  TICKET 


No.     d™° 

NAME            fenn^&    7%6fl- 

Deposited  in  the 

SAVINGS   DEPARTMENT 

OF  THE 

FIRST  NATIONAL  BANK 

niTF        <W.  *o,                              I9 

GOLD 

SILVER 

BILLS 

¥-0 

— 

CHECKS 

«f  s>-7   0  /r 

BALANCE      ?_£££^ 

110     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

rule  except  for  withdrawals  over  $100  and  usually  not  even 
then  except  in  times  of  financial  distress. 

To  make  a  savings  deposit,  the  depositor  should,  after  he 
has  signed  the  signature  card,  make  out  a  savings  deposit 
ticket  which  is  a  little  different  from  the  commercial  deposit 
ticket.  A  common  form  is  illustrated  on  page  109. 

A  deposit  ticket  should  be  made  out  and  taken  with  the 
money  and  pass  book  to  the  savings  teller  each  time  that  a 
deposit  is  made.  When  the  first  deposit  is  made,  the  deposi- 
tor is  given  a  number  which  is  printed  or  written  on  his  pass 
book  and  which  should  be  used  on  all  deposits  and  with- 
drawals thereafter. 

The  pass  book  differs  from  that  of  the  commercial  deposit 
in  that  the  savings  pass  book  records  not  only  deposits  but 
withdrawals  and  balances  each  time  that  a  deposit  or  with- 
drawal is  made.  The  following  is  a  common  form  : 

DEPOSITS          WITHDRAWALS  BALANCES 

Sept.     5  $25.00  $25.00 

Oct.    13  $10.00  15.00 

Nov.    3  20.00  35.00 

Jan.      1  Interest                   .25  35.25 

At  any  time  after  the  interest  date  specified  in  the  rules  of 
the  bank,  the  pass  book  should  be  presented  at  the  savings 
window  and  the  interest  will  be  placed  to  the  credit  of  the 
depositor,  as  in  the  illustration.  It  can  then  be  withdrawn 
or  left  in  the  bank.  If  it  is  left  in  the  bank,  it  will  bear  in- 
terest the  same  as  a  deposit. 

To  withdraw  money  from  a  savings1  account,  the  deposit 
pass  book  must  always  be  presented  and  a  receipt  signed. 
Some  banks  allow  the  depositor  to  make  out  the  receipt  and 
sign  it,  but  most  banks  prefer  to  have  the  teller  make  out  the 
receipt  and  simply  require  the  depositor  to  sign  it.  If  the 


SAVINGS  BANK  ACCOUNTS  111 

depositor  cannot  go  to  the  bank,  and  wishes  some  one  else 
to  make  the  withdrawal  for  her,  she  should  write  out  a  re- 
ceipt like  the  following,  sign  it,  and  send  it  with  her  pass  book. 


CHICAGO,  In..,      *"**     >     19  - 


RECEIVED  OF  FIRST  NATIONAL  BANK 

(Savings  Department) 


a 


nd  ~- 


Dollars 


and  charge  to  Pass  Book  No.. 


Signature 


Banks  print  a  form  similar  to  the  preceding  in  the  back 
part  of  their  pass  books,  which  may  be  used  as  a  model. 

When  money  is  withdrawn,  as  can  be  seen  from  the 
illustration  on  page  110,  the  amount  withdrawn  is  deducted 
from  the  previous  balance  and  the  new  balance  shown.  In 
this  way  the  pass  book  shows  at  all  times  just  how  much  the 
depositor  has  in  the  bank.  It  must  be  understood  that 
money  cannot  be  withdrawn  from  a  savings  account  by 
check. 

The  savings  account  may  be  made  a  very  great  aid  in 
operating  the  budget  system.  As  has  been  explained  in  pre- 
vious chapters,  it  is  not  possible  to  use  the  exact  amount  of 
the  budget  allowance  each  month  but  many  articles  will  be 
required  in  certain  months  only.  One  or  more  savings  ac- 
counts for  these  unexpended  balances  is  the  best  way  to 
accumulate  them.  Suppose  it  is  desired  to  purchase  the  coal 


112      HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

for  the  year  in  July  when  prices  are  lower,  or  to  accumulate 
money  for  some  article  of  furniture.  This  can  easily  be  done 
if  the  unexpended  budget  allowance  is  placed  in  a  savings 
account  until  it  is  needed.  Or,  suppose  that  a  lot  is  being 
bought  on  which  $300  must  be  paid  on  November  1,  with  in- 
terest $15.  Taxes  payable  in  December  amount  to  $9.60. 
Life  insurance  premiums,  payable  on  June  1,  amount  to 
$85.80.  The  family  desires  to  accumulate  a  savings  fund 
by  setting  aside  each  month  a  proportionate  amount  of  the 
whole.  Since  the  total  amount  to  be  raised  is  $410.40,  the 
amount  to  be  deposited  each  month  would  be  $34.20. 
When  a  payment  of  this  kind  is  to  be  made,  the  necessary 
amount  is  withdrawn  from  the  bank.  In  using  the  cash  book 
illustrated  in  Chapter  VI  the  amount  deposited  may  be 
divided  up  into  the  different  columns  as  it  is  there,  or, 
where  the  savings  fund  set  aside  regularly  provides  for 
several  things,  it  may  be  entered  in  one  column,  called  by 
some  particular  name,  such  as  Special  Savings,  and  divided 
up  in  the  yearly  summary.  The  first  method  is,  however, 
usually  preferable.  Using  the  illustration  just  given  of  the 
family  buying  a  lot  and  also  accumulating  a  fund  for  life 
insurance,  each  month  $34.20  might  be  entered  in  this  special 
savings  column  and  at  the  end  of  the  year  the  total  amount 
expended,  $410.40,  would  be  analyzed  for  the  yearly  sum- 
mary, as,  Lot,  $315 ;  taxes,  $9.60 ;  and  life  insurance,  $85.80. 
Or,  preferably,  the  $34.20  would  be  entered  in  the  proper 
columns  monthly. 

Exercise  22.  If  interest  is  computed  on  May  1  and 
November  1  at  3%  on  all  sums  on  deposit  for  one  month  or 
more,  and  the  other  rules  given  in  this  chapter  are  used,  what 
interest  would  be  earned  on  the  following  account,  November 
1 :  June  3,  deposited  $30 ;  July  1,  deposited  $25 ;  August  15, 


SAVINGS  BANK   ACCOUNTS 


113 


withdrew  $15;  September  4,  deposited  $10;  October  2, 
deposited  $20?  Add  the  interest  to  the  account.  What 
interest  would  be  earned  May  1,  if  the  following  deposits  and 
withdrawals  were  made  :  December  10,  withdrew  $25  ;  Jan- 
uary 3,  deposited  $15 ;  February  2,  deposited  $20 ;  March 
20,  withdrew  $15 ;  April  1,  deposited  $10  ? 


CHAPTER  XVII 

LIFE,  ACCIDENT,  AND   HEALTH  INSURANCE 

LIFE  insurance  is  a  form  of  saving  that  is  becoming  more 
popular  each  year  as  its  merits  are  understood.  It  is  not  only 
a  saving,  but  a  protection  as  well.  Accident  and  health  in- 
surance, although  strictly  speaking  not  savings,  furnish 
a  peace  of  mind  that  cannot  be  had  without  them.  They 
may  also  be  the  means  of  preventing  accumulated  savings 
from  being  used  for  the  payment  of  doctor's  bills  in  case  of 
accident  or  sickness. 

There  are  two  general  kinds  of  life  insurance,  fraternal  or 
assessment  and  legal  reserve.  In  fraternal  insurance  the 
payment  depends  upon  the  number  of  members  and  the 
number  of  deaths  in  the  society.  When  the  society  is  young, 
the  payments  are  small  because  there  are  few  deaths,  but  as 
the  members  become  older  the  deaths  become  greater  in 
number  and  the  assessments  become  heavier.  Especially  is 
this  true  unless  the  society  takes  in  many  new  young  mem- 
bers as  the  society  becomes  older.  It  frequently  happens 
that  the  assessments  become  so  heavy  that  the  family  feels 
obliged  to  drop  out  of  the  society  and  thus  lose  all  that  has 
been  put  in  and  the  benefits  as  well.  The  average  life  of 
fraternal  insurance  societies  or  companies  is  not  more  than 
twenty-six  years  and  many  have  not  continued  for  that  length 
of  time.  This  form  of  insurance  is,  therefore,  very  uncer- 
tain and  can  be  nothing  more  than  temporary. 

114 


LIFE,  ACCIDENT,  AND  HEALTH   INSURANCE      115 

The  legal  reserve  insurance  is  issued  by  incorporated  stock 
or  mutual  companies  and  is  based  on  the  "expectation  of  life " 
and  not  on  the  actual  number  of  deaths  as  in  the  case  of 
fraternal  insurance.  This  "  expectation  of  life  "  shows  the 
number  of  deaths  per  thousand  on  the  average  for  each  age. 
Not  all  of  the  money  collected  in  the  form  of  premiums  is 
needed  each  year  to  pay  maturing  claims,  but  the  company 
lays  by  or  reserves  each  year  enough  of  the  premium  sufficient 
to  pay  the  claim  when  it  matures.  This  form  of  insurance  is 
necessarily  more  costly  than  the  fraternal  at  the  beginning, 
but  it  furnishes  a  scientific  method  of  providing  for  claims  as 
they  mature,  while  the  fraternal  does  not. 

There  are  many  different  kinds  of  policies  issued  by  legal 
reserve  companies,  but  they  may  be  classified  as  endowment 
and  life.  An  endowment  policy  is  issued  for  a  definite  num- 
ber of  years,  usually  10, 15,  or  20  years.  An  annual  premium 
is  paid  during  the  term  of  the  policy  or  up  to  the  time  of 
death,  if  it  occurs  before  the  end  of  the  term.  If  the  insured 
lives  to  the  end  of  the  term,  the  insured  or  some  one  else  in 
whose  favor  the  policy  is  issued,  called  the  beneficiary,  will 
receive  the  amount  of  the  policy.  If  the  insured  dies  before 
the  end  of  the  term,  the  beneficiary  will  receive  the  amount 
of  the  policy.  This  form  of  insurance  is  a  good  one  for 
young  persons  as  an  incentive  to  saving  and  as  a  protection 
to  those  dependent  upon  them  as  well,  but  the  interest  on 
the  investment  is  low  and  the  cost  of  the  protection  is  high. 

Life  policies  are  written  in  a  number  of  different  forms, 
the  principal  ones  being  the  ordinary  life  policy  and  a 
"  years'  payment "  policy.  In  the  ordinary  life  policies  a 
premium  is  paid  yearly  as  long  as  the  person  lives.  This 
amount  is  named  in  the  policy  so  that  there  can  be  no  increase 
in  the  amount.  In  the  most  popular  kind  of  "  years'  payment 


116     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

life,"  the  twenty-payment  life,  the  premium  is  paid  annually 
for  twenty  years,  or  as  long  as  the  person  lives  up  to  twenty 
years,  but  the  amount  of  insurance  is  not  payable  until 
death. 

A  temporary  kind  of  insurance  called  convertible  term 
insurance  is  provided  for  those  that  want  insurance  to  secure 
a  loan  or  for  some  temporary  purpose.  This  may  be  taken 
out  for  from  five  to  ten  years  and  may,  within  a  time  specified, 
be  converted  into  any  other  kind  of  insurance  without  a  new 
medical  examination  at  a  rate  depending  upon  the  rate  at 
that  age  for  the  kind  of  insurance.  This  is  a  cheaper  form 
of  insurance  than  either  of  the  others  but  is  only  temporary. 

Nearly  all  companies  allow  the  payment  of  premiums 
annually,  semi-annually,  or  quarterly.  Most  companies 
now  issue  participating  policies  by  which  each  policy  holder 
shares  in  the  surplus  profits  of  the  company.  These  are  called 
dividends.  The  dividend  may  be  drawn  out  in  cash,  it  may 
be  used  to  reduce  the  premium  payment,  or  it  may  be  al- 
lowed to  purchase  additional  insurance. 

In  the  previous  chapter  a  method  of  financing  the  payment 
of  life  insurance  premiums  by  means  of  the  monthly  deposit 
in  a  savings  account  was  given.  It  is  the  duty  of  the  house- 
wife to  insist  on  a  certain  amount  of  life  insurance  and  very 
often  to  do  the  planning  for  the  payment  of  the  premium. 
The  policy  should  be  made  out  to  the  wife  as  beneficiary  or 
to  her  and  the  children.  In  most  states  it  cannot  then  be 
changed  without  her  consent.  Neither  can  it  be  taken  for 
the  debts  of  the  insured,  in  most  states.  But  if  the  policy 
is  made  out  to  the  estate  of  the  insured,  it  may  be  taken  for 
his  debts  upon  his  decease. 

If  one  is  insured  in  a  legal  reserve  company,  he  cannot  lose 
all  that  he  has  put  in  as  in  the  case  of  fraternal  insurance, 


LIFE,  ACCIDENT,  AND  HEALTH   INSURANCE      117 

if  he  should  allow  his  policy  to  lapse.  If  he  wishes  to  discon- 
tinue his  insurance,  he  may  receive  back  part  of  the  amount 
paid  as  shown  by  the  table  of  "  surrender  values,"  or  the 
policy  may  be  continued,  without  further  payments,  for  a  cer- 
tain stated  amount,  as  shown  by  the  table  of  Paid-up  Values. 

The  insured  may,  with  the  consent  of  the  beneficiary,  bor- 
row money  from  the  company  on  his  policy  or  he  may  use  his 
policy  as  security  for  a  loan.  This  should  be  done  only  in  the 
purchase  of  something  of  permanent,  fixed  value,  such  as,  a 
house  and  lot,  or  in  the  case  of  a  great  emergency,  such  as,  a 
severe  illness,  a  surgical  operation,  or  something  of  that  kind. 

Another  kind  of  insurance  that  is  very  desirable  for  the 
family  is  accident  and  health  insurance  for  the  person  whose 
income  supports  the  family.  An  accident  policy  may  be 
taken  out  or  it  may  be  combined  with  health  insurance.  The 
combined  policy  is  the  better,  but  it  is  more  expensive.  In 
the  accident  policy  the  company  agrees  to  pay  a  certain  sum 
in  case  of  loss  of  life  by  accident,  varying  sums  for  accidents 
causing  the  loss  of  parts  of  the  body  or  injury  to  them,  and 
a  weekly  or  monthly  indemnity  in  case  the  person  is  disabled 
as  a  result  of  an  accident.  In  the  combined  policy  the  acci- 
dent feature  is  the  same  and  in  addition  the  insurance  com- 
pany agrees  that  if  a  person  is  sick  and  unable  to  perform  his 
regular  duties  a  certain  sum  will  be  paid  monthly  or  weekly 
for  a  certain  length  of  time.  It  also  provides  for  a  smaller 
payment  if  the  person  is  not  disabled  but  cannot  perform  his 
regular  duties. 

Almost  all  companies  arrange  that  the  premium  be  paid 
semi-annually  or  quarterly  if  desired,  and  many  allow  monthly 
payments.  Although  this  form  of  insurance  is  considered  ex- 
pensive by  many,  it  furnishes  the  best  means  of  making 
provision  for  possible  accident  or  disability  that  may  use 


118      HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

up  the  savings  of  months  and  years  or  plunge  the  family 
into  debt. 

The  various  accident  and  health  companies  are  glad  to 
send  sample  policies  giving  the  various  provisions  of  their 
policies.  Every  person  that  contemplates  taking  out  this 
kind  of  insurance  should  carefully  investigate  the  reliability 
of  a  company  and  the  conditions  of  its  policies  before  insur- 
ing in  it.  This  may  be  done  by  writing  to  the  insurance  com- 
missioner of  the  state  or  to  the  insurance  commissioner  of  such 
states  as  New  York,  Massachusetts,  or  Wisconsin  that  have 
especially  good  laws  on  life,  health,  and  accident  insurance. 

QUESTIONS  FOR  DISCUSSION 

1.  What  are  some  of  the  most  common  methods  of  accumulating 
savings  ? 

2.  How  should  a  savings  account  be  opened  up  ? 

3.  How  should  a  savings  account  for  a  minor  child  be  opened  up? 

4.  What  is  meant  by  a  joint  savings  account  ? 

5.  Give  the  method  of  computing  interest  on  savings  deposits. 

6.  Give  three  other  important  rules  of  the  bank  in  reference  to 
savings  accounts. 

7.  How  do  the  records  of  savings  deposits  and  withdrawals  dif- 
fer from  those  of  commercial  deposits  and  withdrawals  ? 

8.  How  can  money  be  withdrawn  on  savings  deposits  ? 

9.  Can  money  be  withdrawn  by  some  one  other  than  the  depositor 
of  a  savings  account  ?     Explain. 

10.  How  can  a  savings  account  be  made  to  aid  the  budget  system  ? 

11.  What  is  the  principle  of  fraternal  insurance  ? 

12.  What  is  the  principle  of  legal-reserve  insurance  ? 

13.  Explain  endowment,  years'  payment  life,  ordinary  life,  and  term 
insurance. 

14.  What  would  be  the  effect  of  discontinuing  a  policy  in  a  legal- 
reserve  company  ?     In  a  fraternal  society  ? 

15.  Explain  the  advantages  of  health  and  accident  insurance. 

16.  What  are  the  principal  provisions  of  health  and  accident  in- 
surance ? 


CHAPTER  XVIII 

INVESTMENTS  FOR  THE  HOME 

THE  average  family  does  not  have  a  very  large  sum  to 
invest  at  any  one  time.  It  is,  therefore,  advisable,  in  most 
cases,  to  accumulate  a  savings  fund  and  when  the  savings 
reach  a  certain  amount  to  invest  them  in  some  reliable  se- 
curities. Safety  and  a  fair  rate  of  interest  should  be  the  first 
considerations.  One  can  rarely  get  an  investment  yielding 
much  over  5%  that  does  not  have  a  speculative  element  in 
it.  For  a  family  with  the  average  knowledge  of  investments 
nothing  but  approved  bonds  and  mortgages  should  be  con- 
sidered. Stocks  fluctuate  in  value  too  much  and  have  a 
speculative  element  in  them.  Municipal,  railroad,  public 
service,  and  approved  industrial  bonds,  and  mortgages  on 
property  for  not  more  than  50%  to  60%  of  its  value  are  the 
best  forms  of  investment. 

Bonds  rarely  sell  for  their  face  value,  called  in  technical 
language  the  par  of  the  bond.  They  are  quoted  on  the  basis 
of  so  much  for  every  $100  in  the  bond.  For  example,  a 
$1000  bond  quoted  at  108J  would  sell  for  $1085.  It  must  be 
remembered,  too,  that  the  per  cent  of  interest  that  the  bond 
bears  is  not  the  per  cent  of  yield  on  the  investment  unless 
the  bond  is  bought  at  par.  The  cost  of  the  bond  must  be 
taken  as  the  basis  for  finding  the  per  cent  of  yield  on  the  in- 
vestment. For  example,  suppose  that  a  $100  bond  bears 
4J%  interest  but  that  the  bond  can  be  bought  for  $90.  The 

119 


120     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

per  cent  of  yield  would  be  found  by  dividing  the  interest, 
$4.50,  by  .90,  which  would  give  5%  as  the  yield  on  the  invest- 
ment. 

In  addition  to  the  market  quotation  already  explained, 
bonds  are  quoted  at  a  certain  price  and  accrued  interest. 
This  means  that  the  buyer  must  pay  the  market  quotation 
and  whatever  interest  has  accrued  since  the  last  interest 
payment.  This  payment  of  accrued  interest  the  buyer  will 
get  back  when  he  receives  his  next  interest  payment.  For 
example,  a  $1000  bond  bearing  interest  at  4%  was  purchased 
for  92  and  accrued  interest.  The  interest  is  payable  on  the 
first  days  of  February,  May,  August,  and  November.  If  the 
purchase  was  made  April  1,  the  buyer  would  pay  $920  plus 
the  accrued  interest  from  February  1  to  April  1,  two  months, 
or  $6.67,  making  a  total  cost  of  $926.67.  On  May  1  the 
holder  will  receive  $10  interest  which  will  repay  her  for  the 
$6.67  she  advanced  on  purchasing  the  bond  and  $3.33  for 
the  interest  income  from  April  1  to  May  1.  Her  real  per 
cent  of  income  yearly  would  be  found  by  dividing  the  yearly 
interest,  $40,  by  the  price  paid  for  the  bonds,  excluding  the 
accrued  interest.  This  would  give  4.34%  on  the  investment. 

Most  bonds  until  recently  have  been  issued  for  a  face  value 
of  $1000  with  a  few  for  $500.  This  has  made  it  difficult  for 
the  small  investor  to  purchase  bonds,  but  now  there  are  many 
good  bonds  on  the  market  that  have  a  par  value  of  $100. 
It  is  entirely  possible  also  to  deal  with  a  bank  that  will  carry 
the  bond  for  the  investor  by  requiring  her  to  pay  a  part  of  the 
cost  in  cash  and  the  rest  in  monthly  installments. 

In  buying  bonds  it  is  very  important  for  the  investor  to  deal 
with  the  Bond  department  of  some  good  bank  or  with  a  bond 
house  of  known  reliability.  It  is  very  unwise  to  have  any- 
thing to  do  with  so-called  investment  companies  or  bond 


INVESTMENTS  FOR  THE   HOME  121 

houses  that  offer,  usually  by  mail,  mining,  oil,  and  similar 
stocks  cheap  but  with  the  promise  of  big  returns  on  the  in- 
vestment. If  every  woman  who  has  money  to  invest  would 
take  this  advice,  there  would  be  few  disappointed  investors. 

BUYING  A  HOME.  Most  families  at  some  time  in  their 
lives  decide  to  stop  renting  and  to  buy  a  home.  As  to  the 
relative  merits  of  renting  and  of  buying  a  home  there  is 
much  to  be  said  on  both  sides.  So  far  as  the  financial  ques- 
tion is  concerned,  one  must  be  careful  not  to  take  the  glitter- 
ing offers  and  alluring  promises  of  real  estate  men  at  their 
face  value.  In  interesting  the  average  family  in  the  pur- 
chase of  a  home  little  is  said  about  the  expenses  that  are  nec- 
essary as  owner  of  the  property.  Their  big  point  is,  "  Pay 
rent  to  yourself  "  or  "  Let  your  rent  pay  for  your  property." 
The  expenses  of  upkeep,  of  taxes,  of  insurance,  of  probable 
assessments  for  sewer  and  paving,  must  be  carefully  con- 
sidered in  connection  with  the  purchase  price  of  the  property. 

It  is  impossible  in  a  work  of  this  kind  to  give  any  detailed 
advice  about  the  purchase  of  a  home,  but  rather  to  give 
different  methods  of  financing  a  home.  Conditions  differ 
very  greatly  in  different  families  and  in  different  cities  and 
localities  of  the  same  city.  But  no  purchase  should  be  made 
without  having  some  disinterested  person  pass  upon  the 
values  of  the  land  and  of  the  buildings.  Care  also  should  be 
taken  to  see  that  every  material  provision  agreed  upon  is 
incorporated  in  the  written  contract,  as  oral  statements  that 
are  not  included  in  the  written  contract  cannot  be  relied  upon 
in  case  of  dispute. 

Whatever  may  be  the  financial  advantages  or  disadvan- 
tages of  buying  a  home  compared  with  renting,  there  are 
reasons  for  owning  one's  own  home  that  far  outweigh  any 
financial  disadvantage  that  there  might  be.  The  most  im- 


122     HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

portant  of  these  are  the  sense  of  satisfaction  and  confidence, 
the  greater  comfort  and  privacy,  the  knitting  together  of  the 
family  into  a  unit,  in  many  cases  through  united  planning 
and  self-denial,  and  the  laying  of  the  foundation  for  a  broader 
and  better  citizenship. 

After  a  family  has  determined  to  buy  a  home  the  question 
of  ways  and  means  is  an  important  one.  Few  families  are 
able  to  pay  cash  for  a  home  unless  they  wait  an  unreasonable 
length  of  time.  The  best  that  can  be  done  usually  is  to  accu- 
mulate by  systematic  saving  sufficient  to  make  a  payment 
of  from  10%  to  50%  down.  The  principal  methods  of  financ- 
ing a  home  will  now  be  considered. 

If  the  purchaser  can  pay  from  30%  to  50%  down,  she  can 
usually  secure  title  to  the  property  and  give  a  mortgage 
for  the  balance,  with  interest.  It  is  rare,  however,  that 
the  seller  is  willing  to  accept  as  small  a  payment  as  30% 
and  take  a  mortgage.  If  the  seller  is  not  willing  to  take  a 
mortgage,  some  other  person  must  be  found  who  will  take  a 
mortgage  on  the  property.  If  the  mortgage  is  for  not  more  than 
from  40%  to  60%  of  the  value  of  the  property,  it  should  not 
be  necessary  to  pay  anyone  a  commission  for  securing  the 
loan.  One  should  carefully  avoid  loan  agents  and  real  estate 
men  that  charge  from  1%  to  2%  commission  or  even  some- 
times as  high  as  4%.  These  commissions  must  usually  be 
paid,  too,  each  time  that  the  mortgage  is  renewed.  Of 
course  the  buyer  must  expect  to  pay  for  the  abstract  of  title 
—  an  investigation  of  the  title  to  the  property  to  know  that 
the  title  is  good  and  that  no  one  else  has  an  interest  in  it  — • 
and  any  legal  advice  and  work  that  may  be  necessary. 

Another  method  that  involves  the  use  of  less  cash  places 
a  second  mortgage  on  the  property  in  addition  to  the  first. 
By  this  method  from  20%  to  25%  is  paid  in  cash.  About 


INVESTMENTS  FOR  THE  HOME  123 

50%  is  in  the  form  of  a  first  mortgage  and  the  balance  is  in 
the  form  of  a  second  mortgage.  The  second  mortgage  is 
usually  accepted  by  the  seller  of  the  property  and  it  is  ex- 
pected that  it  will  be  paid  at  the  end  of  the  time  specified,  as 
a  second  mortgage  is  seldom  renewed.  If  the  seller  of  the 
property  or  the  builder  of  it  is  unwilling  to  take  a  second 
mortgage,  this  method  should  not  be  considered.  If  the 
second  mortgage  must  be  placed  in  the  open  market  or 
through  an  agent,  a  heavy  commission  must  usually  be  paid, 
as  a  second  mortgage  is  considered  poor  security.  Under 
these  conditions  it  becomes  an  expensive  form  of  borrowing 
and  is  not  to  be  recommended. 

A  third  method  that  is  now  being  used  in  the  cities  to  a 
large  extent  is  the  payment  of  a  small  per  cent  down  and  the 
payment  of  the  balance  in  monthly  installments.  In  a  sale 
by  this  method  10%  or  even  less  is  paid  in  cash  and  the 
balance  in  monthly  installments  that  include  interest.  But 
the  buyer  does  not  usually  understand  how  the  computations 
are  made  and  thinks  he  has  the  property  paid  for  long  before 
it  is  fully  paid.  The  usual  method  of  computing  will  be  ex- 
plained by  an  example.  Let  us  suppose  that  a  property  is 
purchased  for  $5000  and  $500  paid  in  cash.  The  agreed  rate 
of  interest  is  5%  per  year  and  $50  is  to  be  paid  monthly. 
Everything  is  computed  on  a  yearly  basis.  The  interest  is 
computed  on  $4500  for  one  year  at  5%,  which  gives  $225. 
Interest  on  each  payment  of  $50  is  computed  from  the  date 
of  payment  to  the  end  of  a  year  from  the  time  the  contract 
is  entered  into,  or  sometimes  to  the  end  of  the  current  year 
for  the  first  year's  computation  and  after  that  at  the  end  of 
each  year.  If  the  purchase  was  made  June  1 ,  the  first  monthly 
payment  would  be  made  July  1.  The  first  payment  of  $50 
would  bear  interest  for  eleven  months,  the  next  for  ten 


124     HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

months,  the  next  for  nine  months,  and  so  on  till  the  end  of  the 
year.  The  first  year  would  have  eleven  payments  in  addition 
to  the  first  payment  of  $500  and  each  year  after  that  would 
have  twelve  payments.  These  eleven  payments  for  the  first 
year  amount  to  interest  for  66  months  or  five  and  one  half 
years.  The  interest  of  $50  for  five  and  one  half  years  at  5% 
is  $13.75.  The  total  payment  for  the  year  is  then  $563.75. 
From  this  is  subtracted  the  interest  for  a  year,  $225.  The 
balance,  $338.75,  reduces  the  principal  that  much,  leaving 
$4500  less  $338.75  or  $4161.25  as  the  principal  for  the  next  year. 

This  is  a  more  expensive  form  of  purchase  than  those  where 
a  mortgage  is  given.  When  a  sale  of  this  kind  is  made,  a  land 
contract  is  given  to  the  purchaser.  The  land  contract  is 
made  out  in  duplicate  and  signed  by  both  parties.  It  stipu- 
lates the  terms  of  sale  and  warrants  that  at  the  completion 
of  the  contract  a  deed  will  be  given  to  the  purchaser.  Either 
party  to  the  land  contract  may  assign  his  or  her  interest  in 
it  to  some  one  else.  If  the  seller  of  the  property  wishes  to 
obtain  cash  for  the  land  contract,  he  must  accept  a  heavy 
discount,  oftentimes  10%  or  more.  For  this  reason  he  puts 
the  price  of  the  property  up  so  that  it  will  net  him  about  what 
he  considers  the  value  of  the  property. 

Sometimes,  if  only  a  small  payment  is  made  when  the 
property  is  purchased  and  a  small  payment  is  made  monthly, 
a  "  lease  with  option  "  is  given  instead  of  a  land  contract. 
This  is  a  lease  with  so  much  payable  monthly  as  rent  but  with 
the  option  that  at  the  expiration  of  the  lease,  usually  one  or 
two  years,  the  person  to  whom  the  lease  is  given,  called  the 
lessee,  has  the  right  to  exercise  his  option  of  purchasing  the 
property  and  receiving  a  land  contract.  The  amount  that 
has  been  paid  as  rent  is,  according  to  the  agreement,  to  be 
applied  on  the  purchase  price  of  the  property. 


INVESTMENTS  FOR  THE   HOME  125 

The  only  other  method  that  is  decidedly  different  from 
these  methods  is  the  plan  of  membership  in  a  building  and 
loan  association.  In  choosing  a  building  and  loan  associa- 
tion, a  local  association  that  has  a  good  reputation  and 
that  is  carefully  managed  by  honest  men  of  good  business 
ability  is  to  be  preferred.  In  borrowing  money  on  a  prop- 
erty or  to  build,  one  cannot  borrow  more  than  from  50% 
to  80%  of  the  value  of  the  property.  No  fixed  rule  can 
be  given,  as  the  location  of  the  property,  its  condition,  and 
what  is  termed  the  "  moral  risk,"  or  the  ability  to  keep  up 
the  payments,  is  important  in  fixing  the  amount  of  the  loan 
that  can  be  taken  out.  A  mortgage  is  given  to  the  building 
and  loan  association  for  the  amount  borrowed.  The  rest 
may  be  paid  in  cash  that  has  been  accumulated  or  may  be 
borrowed  on  personal  security  or  by  giving  some  form  of  col- 
lateral security,  such  as  a  life  insurance  policy. 

The  building  and  loan  association  provides  a  means  of  ac- 
cumulating money  with  which  to  build  and  of  borrowing 
money  to  complete  the  payment.  In  either  case  the  indi- 
vidual must  purchase  shares  of  the  association  at  a  par  value 
of  $100.  A  small  fee  or  premium  is  required  when  the  appli- 
cation for  shares  is  made  out.  It  is  usually  one  dollar  per 
share.  Each  company  usually  permits  a  choice  of  several 
plans  for  making  the  monthly  payments  varying  in  the 
amount  to  be  paid  monthly  and  in  the  length  of  time  it  will 
take  to  pay  up  the  shares.  If  the  shares  are  bought  to  accu- 
mulate a  fund,  the  amount  paid  each  month  receives  from 
5%  to  7%  interest.  The  payments  and  the  accumulated 
interest  can  be  withdrawn  at  any  time  by  giving  a  month's 
notice  to  the  association.  For  example,  suppose  that 
twenty  shares  having  a  total  par  value  of  $2000  are  purchased 
on  which  $20  would  be  paid  as  a  fee  and  75  cents  per  share 


126      HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

is  to  be  paid  monthly.  At  the  end  of  a  year,  $180  has 
been  paid  and  $185.78  may  be  withdrawn  or  allowed  to 
accumulate.  At  the  end  of  92  months,  $1380  will  have  been 
paid  in  cash  but  the  shares  are  then  fully  paid  up  and  the 
owner  can  withdraw  $2000. 

If  shares  are  purchased  for  the  purpose  of  borrowing 
money  at  once,  the  same  plan  is  followed  but  the  payments  are 
larger  to  include  the  interest  on  the  amount,  borrowed.  The 
interest  rate  is  usually  10%  on  the  loan,  but  the  borrower's 
shares  also  bear  interest  or  share  in  the  dividends  so  that  the 
net  cost  of  the  loan  is  usually  about  5%.  Using  the  same 
purchase  of  twenty  shares  as  an  example,  suppose  that  as 
soon  as  the  shares  are  purchased  a  loan  of  $2000  is  made. 
In  this  case  instead  of  paying  75c  per  share,  the  payment 
would  be  about  $1.59  per  share,  making  a  monthly  payment 
of  $31.67  instead  of  $15.  At  the  end  of  92  months  he  will 
have  paid  in  $2913.64,  arid  his  loan  will  have  been  fully 
paid  up.  He  has  then  paid  $913.64  interest  for  the  use  of 
the  money  92  months. 

If  the  borrower  wishes,  after  he  has  paid  50%  or  more,  he 
may  mortgage  his  property  and  cancel  his  shares  by  paying 
the  balance  of  the  loan.  Anyone  desiring  to  borrow  money 
in  this  way  can  get  full  information  from  the  secretary  of  any 
building  and  loan  association. 

Exercise  23.  a.  What  would  be  the  cost  of  three  Penn- 
sylvania $1000  bonds  at  97^  ? 

b.  If  the  bonds  bear  4|%  interest  annually,  what  is  the 
per  cent  of  yield  on  the  investment  ? 

Exercise  24.  a.  A  wishes  to  buy  $5000  worth  of  New 
York  Central  5%  bonds  quoted  at  102|  and  accrued  interest. 
If  interest  was  last  paid  on  July  1  and  the  purchase  is  to  be 
made  on  September  1,  what  will  the  bonds  cost? 


INVESTMENTS  FOR   THE   HOME  127 

b.  What  rate  of  interest  would  A  receive  on  his  investment 
in  (a)  ? 

Exercise  25.  The  family  of  James  Williams  has  purchased 
a  house  and  lot  for  $4750  by  paying  $500  down  and  agreeing 
to  pay  $40  per  month  until  the  entire  amount  is  paid.  If  the 
purchase  was  made  on  April  1  and  the  rate  of  interest  is  5%, 
how  much  remains  to  be  paid  at  the  end  of  one  year  from 
April  1  ? 

Exercise  26.  The  Frank  Gibson  family,  on  October  1, 
purchased  a  duplex  flat  and  lot  for  $6500.  They  paid  cash 
$1500  and  gave  a  mortgage  for  the  balance  with  interest  at 
6%.  They  agreed  to  pay  $500  and  accrued  interest  on  Octo- 
ber 1  of  each  year  until  the  entire  amount  was  paid.  The 
insurance  is  40c  per  year  on  each  $100  of  the  risk  and  the 
flat,  which  is  valued  at  $5100,  is  insured  for  two  thirds  of  its 
value.  The  rate  of  taxation  is  14  mills  on  an  assessed 
valuation  of  80%  of  the  cost.  The  upper  flat  is  rented  for 
$26  per  month.  How  much,  in  addition  to  the  rent  of  the 
upper  flat,  must  be  set  aside  each  month  for  twelve  months 
in  order  to  provide  for  all  these  payments  and  expenses  on  the 
property  ? 

Exercise  27.  The  William  Fulton  family  bought  a  house 
and  lot  on  November  1  for  $3800.  They  paid  cash  $1500 
and  borrowed  the  balance  from  the  Investment  Savings  and 
Loan  Company.  For  this  loan  they  agreed  to  pay  $30.67 
per  month  for  118  months.  At  the  end  of  that  time  their 
loan  was  to  be  canceled.  The  payments  were  kept  up  till 
the  property  was  paid  in  full.  If  the  money  paid  in  cash  was 
worth  5%  per  year,  the  insurance  per  year  was  35c  per  $100 
on  a  risk  of  $2700,  and  the  repairs  and  taxes  averaged  $40 
per  year,  what  is  the  entire  amount  paid  on  the  property  at 
the  end  of  the  118  months? 


128     HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 


QUESTIONS  FOR  DISCUSSION 

1.  What  kinds  of  investments  are  the  best  for  the  average  buyer  ? 
Why? 

2.  What  is  meant  by  the  par  value  of  a  bond?     How  are  bonds 
quoted  ? 

3.  How  is  the  yield  per  cent  on  the  investment  found  if  the  bonds 
are  bought  for  either  more  or  less  than  par  ? 

4.  How  is  the  accrued  interest  on  a  bond  found?     Is  it  really  an 
expense  of  the  bond  ? 

5.  What  are  the  reasons  other  than  financial  for  owning  one's  own 
home? 

6.  What  cautions  should  be  observed  in  purchasing  a  home  and 
giving  a  mortgage  for  part  of  the  purchase  price  ? 

7.  In  buying  a  property  on  installments  payable  monthly,  how 
do  you  determine  how  much  is  paid  on  the  principal  and  how  much  is 
interest  ? 

8.  What  is  meant  by  a  land  contract  ?     By  a  "lease  with  option"  ? 

9.  Explain  the  method  of  accumulating  a  fund  in  a  building  and 
loan  association. 

10.   Explain  the  method  of  borrowing  money  from  a  building  and  loan 
association. 


CHAPTER  XIX 

LEGAL  POINTS  EVERY  WOMAN   SHOULD   KNOW 

No  business  man  would  think  of  running  his  business 
without  either  having  a  working  knowledge  of  the  ordinary 
legal  rules  or  securing  competent  advice  on  such  matters 
as  they  occur.  The  latter  is  expensive  and,  in  many  cases, 
unnecessary.  In  the  running  of  a  household  it  is  just  as 
necessary  that  the  housekeeper  know  certain  simple  legal 
rules  that  will  put  her  at  ease  in  business  dealings  and  in 
many  cases  save  the  family  unnecessary  expense  and  loss. 

SIGNING  CONTRACTS.  One  invariable  rule  should  be  made 
and  followed  and  that  is  not  to  sign  any  paper  without  first 
reading  it  over  and  understanding  it.  No  woman  should  take 
anyone's  word  for  what  is  in  the  contract.  If  an  agent  makes 
statements  and  promises  that  are  not  a  part  of  the  written 
or  printed  contract,  they  cannot  be  considered  a  part  of  the 
contract.  The  only  safe  way  is  to  insist  that  every  material 
thing  be  incorporated  into  the  contract  before  it  is  signed. 
It  should  be  known  also  that  some  printed  contracts  cannot 
be  changed  even  by  the  agent's  crossing  out  certain  printed 
words  and  inserting  others.  Of  such  a  nature  are  insurance 
contracts  and  any  other  contract  that  states  on  its  face  that 
"no  agent  has  the  power  to  change  any  of  the  provisions  of 
the  printed  contract."  As  already  explained,  a  married 
woman  should  sign  all  legal  documents  with  her  own  legal 
name. 

K  129 


130     HOUSEHOLD   ACCOUNTING  AND   ECONOMICS 

ORDERING  GOODS.  If  an  order  is  given  for  goods  to  be 
delivered  at  some  future  time,  the  contract  is  usually  com- 
plete when  the  order  is  accepted  by  the  firm  for  whom  the 
agent  is  selling.  The  acceptance  may  be  shown  by  the 
firm's  sending  a  formal  notice  of  acceptance,  usually  on  a 
postal  card,  or  by  shipping  the  goods.  The  order  may  be 
canceled  at  any  time  before  notice  of  acceptance  reaches  the 
buyer ;  after  that  it  cannot  usually  be  canceled. 

BREACH  OF  WARRANTY  IN  THE  SALE  OF  GOODS.  When 
goods  are  ordered  from  a  sample,  from  catalog,  or  by  descrip- 
tion, or  an  order  is  given  to  be  made  according  to  a  description 
given  by  the  buyer,  there  is  an  implied  guarantee  that  the 
article  will  be  equal  to  the  sample  or  description.  If  it  is 
not,  the  buyer  ordinarily  has  a  choice  of  two  remedies : 

1.  She  may  keep  the  article  and  claim  a  deduction  in  the 
price  on  account  of  a  failure  of  the  article  to  equal  the  guar- 
antee.    Under  these  conditions  she  should  either  not  make 
payment  until  a  deduction  is  made  or  she  should  pay  only 
part  of  the  price. 

2.  She  may  refuse  to  keep  the  article  and  notify  the  seller 
to  that  effect. 

INSTALLMENT  PURCHASES.  Furniture,  books,  musical  in- 
struments, and  other  articles  are  often  purchased  on  install- 
ments. Almost  all  installment  contracts  provide  that  if 
the  payments  are  not  paid  as  they  fall  due,  the  seller  may 
enter  and  take  the  property  without  going  to  law.  The 
contract  also  usually  provides  that  no  part  of  the  payments 
already  made  need  be  returned.  The  title  to  all  installment 
purchases  remains  in  the  seller  until  the  entire  purchase  price 
has  been  paid.  But  the  risk,  in  case  of  loss  by  fire,  flood, 
tornado,  etc.,  is  in  the  buyer.  For  this  reason  purchases  on 
installments  should  be  insured  by  the  buyer. 


LEGAL  POINTS   EVERY  WOMAN  SHOULD  KNOW      131 

If  it  is  impossible  to  meet  an  installment  as  it  falls  due,  a 
statement  of  the  reasons  should  be  made  to  the  seller  and 
his  consent  obtained  to  the  postponement.  Most  sellers 
would  much  prefer  to  grant  a  reasonable  request  of  this 
kind  than  to  take  the  property  back. 

Notice  must  usually  be  given  the  seller  if  the  property  is 
to  be  removed  from  one  place  to  another.  The  consent  of 
the  original  seller  must  also  be  obtained  if  the  original  buyer 
wishes  to  sell  the  article  before  it  is  fully  paid  for.  No  title 
can  be  given  in  a  transfer  of  this  kind,  but  the  buyer  simply 
takes  the  same  right  that  the  original  buyer  had,  and  must 
complete  the  payments  before  he  will  get  a  title  to  the  prop- 
erty. In  many  states  also  it  is  a  criminal  offense  to  sell  an 
article  bought  on  the  installment  plan  without  the  consent 
of  the  original  seller,  if  the  article  has  not  been  fully  paid 
for. 

PAYMENTS  IN  MONEY.  Payments  of  money  should  not  be 
made  to  strangers,  excepting  possibly  in  very  small  amounts. 
When  a  bill  is  presented  by  a  regular  collector  and  it  is  known 
that  the  bill  is  correct,  the  bill  may  be  paid  in  money  if  the 
amount  is  not  large.  The  housekeeper  should  in  all- cases  of 
this  kind  demand  either  a  receipted  bill  or  a  receipt.  It  is  a 
very  dangerous  practice  to  make  a  payment  of  money  on 
giving  an  order  to  an  agent.  Reliable  companies  do  not  de- 
mand an  advance  payment.  If  the  payment  is  made  in  ad- 
vance to  an  agent  who  is  not  authorized  by  the  company  or 
who  is  authorized  to  take  orders  but  not  to  collect  money, 
the  payer  may  lose  what  he  has  paid.  Frauds  of  this  kind 
have  frequently  been  practiced  upon  housekeepers  by  persons 
taking  orders  for  magazines,  perhaps  offering  some  premium 
with  the  magazines  and  collecting  a  part  or  all  of  the  sub- 
scription price  in  advance.  The  housekeeper  usually  gets 


132     HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

nothing  for  her  money,  as  these  unauthorized  persons  pocket 
the  money  and  turn  in  no  subscriptions. 

PAYMENTS  BY  CHECK.  Many  cautions  have  been  given  in 
regard  to  making  payments  by  check,  in  the  chapter  on  that 
subject,  but  there  are  a  few  legal  points  that  should  be 
added.  Bills  presented  by  agents  or  collectors,  if  the  amount 
is  larger  than  a  dollar,  should  usually  be  paid  by  check.  If 
the  check  is  made  payable  to  the  business  house  to  which 
the  money  is  owed,  it  is  entirely  safe  to  make  the  payment  to  a 
stranger,  as  he  cannot  use  it  fraudulently  without  committing 
a  forgery.  Look  with  suspicion  upon  any  collector  who  asks 
you  to  make  the  check  payable  to  himself.  No  receipt  need 
be  taken  when  payment  is  made  by  check,  as  the  check  will 
be  a  receipt  when  it  is  returned  by  the  bank  at  the  end  of  the 
month.  If  a  check  has  been  given  in  payment  and  it  is  found 
that  the  check  was  given  for  the  wrong  amount  or  for  a 
fraudulent  purchase,  the  bank  may  be  given  notice  to  stop 
payment  and  must  heed  the  order  of  the  drawer  of  the  check. 
It  is  best  to  do  this  by  telephone  at  once  as  soon  as  the  mis- 
take is  discovered  and  then  to  send  a  written  notice.  No 
matter  through  how  many  hands  the  check  has  passed,  the 
bank  will  refuse  payment  if  the  notice  reaches  the  bank  be- 
fore the  check  does. 

LEASE.  When  property  is  leased  for  a  definite  term  of 
years  or  months,  the  lease  terminates  at  the  end  of  the  time 
specified.  But  if  the  tenant  remains  beyond  the  time  speci- 
fied in  the  lease,  he  may  be  considered  by  the  landlord  as  a 
tenant  from  month  to  month  or  as  renewing  the  lease  for  the 
same  time  as  the  original  lease.  It  must  be  understood  that 
leases  for  more  than  one  year  in  practically  all  states  are 
not  enforceable  unless  in  writing.  But  when  the  tenancy  is 
from  month  to  month,  ordinarily  called  renting  by  the  month, 


LEGAL  POINTS  EVERY  WOMAN   SHOULD  KNOW      133 

notice  must  be  given  in  writing  in  most  states  by  either  party 
at  least  thirty  days  before  it  is  desired  to  terminate  the 
tenancy.  The  tenant  must  also  vacate  the  property  at  the 
time  specified  or  he  may  be  held  for  the  rent  for  another 
month.  For  example,  if  the  tenancy  expires  on  April  30, 
and  the  tenant  does  not  completely  vacate  the  property  by 
that  date,  he  can  be  compelled  to  pay  rent  for  the  month  of 
May  if  the  landlord  wishes  to  insist  upon  it. 

When  a  written  lease  is  signed,  the  person  leasing  the  prop- 
erty, called  the  lessee,  must  observe  the  conditions  and  re- 
strictions imposed  by  the  lease.  These  differ  considerably 
in  different  leases,  but  there  are  some  conditions  that  are 
either  included  in  most  leases  or  are  implied  by  the  law. 
The  tenant  must  surrender  the  property  at  the  expiration 
of  the  lease  "in  as  good  condition  as  now,  necessary  wear 
and  damage  by  the  elements  excepted."  He  must  agree  to 
obey  the  rules  and  regulations  of  the  city  in  reference  to  the 
use  of  the  street  and  alley  adjacent  to  the  property,  such  as 
the  proper  disposal  of  garbage  and  the  throwing  of  refuse 
in  the  alley,  and  the  cleaning  of  the  snow  from  the  sidewalk. 
Of  course,  if  a  person  is  a  tenant  in  a  duplex  occupied  also 
by  the  owner  he  may  be  released  from  certain  of  these  re- 
strictions by  the  landlord,  such  as  the  removal  of  snow  from 
the  sidewalk.  He  may  be  prohibited  from  renting  rooms  in 
the  building  to  some  one  else,  and  is  usually  prohibited  from 
subleasing  the  property  without  the  consent  of  the  landlord. 
He  can  ordinarily  be  held  for  the  rent  for  the  term  of  the  lease 
even  if  the  building  is  out  of  repair  or  needs  redecorating, 
or  the  furnace  is  out  of  repair,  or  the  plumbing  is  out  of  repair, 
unless  the  landlord  has  specifically  agreed  to  do  these  things 
in  the  lease.  If  he  leaves  the  property  before  the  expiration 
of  the  lease,  he  can  be  held  for  the  rent  for  the  balance  of  the 


134      HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

period  unless  the  property  has  been  rendered  untenable  by 
the  elements,  or  is  dangerous  to  health  because  unsanitary, 
or  is  dangerous  to  morals.  In  leasing  or  renting  a  property, 
neither  party  is  bound  by  any  oral  statements  that  are  not 
put  into  the  written  lease.  Neither  is  a  contract  to  lease  or 
rent  a  property  binding  between  the  parties  unless  some 
money  is  paid  to  bind  the  contract.  For  example,  if  A  agrees 
to  lease  to  B  a  property  for  $25  a  month  and  to  wait  a  week 
before  B  makes  a  payment  on  it,  he  may  disregard  this 
agreement  and  the  next  day  lease  the  property  to  C.  But 
if  B  had  paid  something  down  and  taken  a  receipt  for  the 
payment,  A  could  be  held  to  the  agreement.  Any  amount 
accepted  by  the  landlord  as  a  payment  on  the  lease  is  sufficient 
to  bind  the  agreement. 

HIRE  OF  SERVICE.  The  hiring  of  a  maid  for  the  house  in- 
volves certain  legal  rights  and  duties  that  every  woman  should 
know.  Contracts  of  this  kind  are  usually  oral,  but  just  as 
much  contracts  as  if  they  were  in  writing.  It  must  be  under- 
stood, however,  that  if  the  contract  for  services  is  for  a  period 
greater  than  a  year  from  the  date  of  the  contract,  it  must  be  in 
writing  in  order  to  be  enforceable.  As  the  contract  of  hire 
is  usually  by  the  week,  either  party  is  entitled  to  a  week's 
notice  before  terminating  the  contract.  This  does  not  pre- 
vent the  employer  from  discharging  the  maid  for  gross 
incompetency,  disobedience,  insolence,  or  immorality.  In 
cases  of  this  kind  the  employment  may  terminate  at  once  and 
the  employer  must  pay  only  for  that  part  of  the  week  that 
her  maid  has  worked.  The  maid  may  also  terminate  the  em- 
ployment at  once  without  notice  if  her  employer  has  treated 
her  cruelly.  If  the  contract  of  employment  is  for  a  definite 
time  with  the  wages  payable  weekly  or  monthly,  the  em- 
ployer will  be  held  liable  for  the  payment  of  wages  for  the 


LEGAL  POINTS  EVERY  WOMAN  SHOULD  KNOW      135 

entire  time  of  the  contract  if  the  maid  is  discharged  without 
good  cause.  If,  however,  the  maid  can  get  work  for  a  part 
or  all  of  the  time,  what  she  earns  must  be  deducted  from  the 
amount  of  the  contract  unpaid. 

In  hiring  a  maid,  every  important  feature  of  the  work 
should  be  agreed  upon,  such  as,  the  wages,  afternoons  off, 
use  of  evenings,  deduction  for  breakage,  entertainment  of 
company,  duties,  etc.  No  deduction  can  be  made  from  the 
wages  for  breakage  or  damage  to  the  property  of  the  em- 
ployer, unless  willful,  except  by  agreement.  Since  the  em- 
ployer usually  has  the  advantage  in  the  matter  of  carrying 
out  the  contract,  she  should  be  careful  to  keep  the  contract 
agreed  upon  and  give  the  maid  extra  compensation  or  special 
privileges  if  other  duties  are  imposed  upon  her.  The  maid 
has,  however,  the  advantage  in  the  matter  of  terminating  the 
employment  without  notice,  as  it  is  usually  impossible  to 
get  any  damages  or  any  redress  if  the  maid  leaves  without 
giving  notice. 

QUESTIONS  AND  PROBLEMS  FOR  DISCUSSION 

1.  What  two  important  rules  should  be  observed  in  signing  con- 
tracts ? 

2.  Is  it  safe  to  sign  a  contract  the  agent  has  changed  by  crossing 
out  printed  words  and  inserting  others? 

3.  When  an  order  is  given  for  goods,  can  the  order  be  canceled  ? 

4.  In  installment  sales,  what  right  has  the  seller  if  the  payments 
are  not  made  as  they  mature  ? 

5.  Can  the  buyer  of  goods  on  the  installment  plan  sell  the  goods 
before  they  are  entirely  paid  for  ?     Explain. 

6.  If  goods  are  ordered  from  sample  and  the  goods  when  delivered 
are  not  equal  to  the  sample,  what  remedies  has  the  buyer  ? 

7.  Mrs.  Brown  signed  a  contract  to  purchase  certain  kitchen  uten- 
sils from  the  Utility  Company.    Before  any  notice  was  received  from 


136     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

the  company  or  the  goods  were  shipped,  she  canceled  the  order.     Is  she 
bound  by  the  contract  ? 

8.  Mrs.  Kline  bought  a  set  of  books  on  the  installment  plan.     It 
was  provided  in  the  contract  that  she  was  to  pay  $2.50  a  month  until 
the  whole  amount  of  $18  was  paid.     She  received  the  books  and  paid 
one  installment,  then  shipped  the  books  back  and  notified  the  com- 
pany that  she  would  not  keep  them.     Can  she  be  held  to  the  contract  ? 

9.  Mrs.  Willis  signed  a  printed  contract  for  the  purchase  of  a 
vacuum  cleaner.      The  contract  provided  that  a  deduction  of  $5  was 
to  be  made  from  the  price  if  delivery  was  made  before  May  1.     The 
agent  offered  a  further  discount  of  $3  if  delivery  was  made  before 
April  1,  but  this  was  not  put  into  the  written  contract.     Delivery  was 
made,  according  to  agreement,  March  20,  but  the  agent  refused  to  make 
the  deduction  of  $3.     Can  he  be  forced  to  do  so  ? 

10.  Why  is  it  unsafe  to  make  payments  of  money  to  strangers  ? 

11.  A  collector  for  the  A.  B.  Case  Co.  presented  a  bill  to  Mrs.  Jones 
amounting  to  $4.85.     She  paid  the  bill  in  money.     After  she  had  done  so 
she  discovered  that  the  bill  was  incorrect  and  should  have  been  for 
$2.85.     She  called  up  the  Case  Company  and  found  that  the  collector 
was  not  authorized  to  collect  for  them  and  had  never  been  employed 
by  them.     What  remedy  has  she  ?     If  she  had  given  a  check  in  payment, 
made  payable  to  the  A.  B.  Case  Company,  what  could  she  have  done? 

12.  Mrs.  Cameron  signed  an  order  for   the  Housekeeping   System 
magazine,  presented  by  an  agent.     She  paid  the  subscription  price  for 
one  year,  $1.50,  and  took  the  agent's  receipt.     She  did  not  receive  the 
magazine  and  wrote  to  the  company  concerning  it.     They  replied  that 
they  had  never  employed  this  agent  and  had  received  no  part  of  the  sub- 
scription price.     What  remedy  has  she  ?     Why  ? 

13.  Mrs.  Barber  ordered  an  aluminum  steam  cooker  from  an  alumi- 
num sample.     When  the  cooker  was  delivered  it  was  found  that  it  was 
not  made  of  aluminum  but  of  heavy  tin.     She  refused  to  take  it.     Did 
she  have  the  right  ?     Why  ? 

14.  Mrs.  Jackson,  the  owner  of  a  delicatessen  store,  sold  goods  to  a 
stranger  amounting  to  $1.25.     He  presented  a  check  for  $10  which  she 
cashed.     She  indorsed  this  check  to  the  Hume  Grocery  Co.  in  payment 
for  some  groceries.     When  the  Hume  Grocery  Co.  took  it  to  the  bank, 
payment  was  refused  because  there  were  no  funds  in  the  bank  to  the 
credit  of  the  drawer  of  the  check.    Who  will  lose  ?    Why  ? 


LEGAL  POINTS  EVERY  WOMAN  SHOULD   KNOW      137 

16.   When  property  is  leased  by  the  month,  what  notice  should  be 
given  to  terminate  the  lease  ? 

16.  What  are  the  principal  conditions  imposed  upon  the  lessee  of  a 
property  ? 

17.  Can  the  owner  of  a  property  be  forced  to  make  repairs  to  a  fur- 
nace or  to  the  plumbing  under  the  ordinary  lease  ?     Explain. 

18.  The  C.  E.  Simms  family  leased  a  house  for  one  year  with  the 
agreement  that  the  owner  would  redecorate  the  house  after  three  months. 
The  lease  was  put  into  writing  but  nothing  was  said  about  the  redeco- 
rating.    At  the  end  of  three  months  the  landlord  refused  to  redecorate 
the  property.     The  Simms  family  had  it  redecorated  and  withheld  the 
payment  of  the  rent  sufficient  to  cover  the  cost  of  redecorating.     The 
landlord  refused  to  accept  this  reduction  and  brought  suit  for  the 
money.     Who  will  win  ?     Why  ? 

19.  Mrs.  Mann  hired  a  maid  for  four  months  at  $5  per  week,  to  be 
paid  weekly.     At  the  end  of  two  months  she  discharged  her  without 
good  cause.     The  maid  was  unable  to  get  work  during  the  remaining 
two  months  and  brought  suit  against  Mrs.  Mann  for  the  balance  of  the 
wages,  $40.     Should  she  recover  that  amount?    Why? 

20.  Mrs.  Norton  hired  a  maid  at  the  weekly  wage  of  $4.50.    At  the 
end  of  the  second  week,  she  discharged  her  because  of  gross  incompe- 
tency  and  insolence.     As  the  maid  had  broken  a  cut  glass  dish  worth 
$5  she  refused  to  pay  her  anything  for  the  second  week.     Did  she  have 
the  right  to  refuse  payment  ?    Explain. 


CHAPTER  XX 

LEGAL  POINTS  EVERY  WOMAN  SHOULD   KNOW  (Concluded) 

RIGHT  TO  CONTRACT  IN  HUSBAND'S  NAME.  A  wife  may 
enter  into  contracts  of  purchase,  in  her  husband's  name,  to 
purchase  necessities  for  the  family,  and  the  husband  will  be 
bound  by  them.  Necessities  include  food,  clothing,  shelter, 
education,  medical  attendance,  dentists'  bill,  etc.,  all  con- 
sidering the  station  of  life  and  the  income  of  the  husband. 
For  a  wife  whose  husband's  income  is  $1000,  a  party  dress 
costing  $100  and  other  similar  expensive  things  would  not 
be  considered  necessary.  To  one  with  an  income  of  $3000, 
with  a  social  standing  making  such  an  expenditure  necessary, 
it  would  be  considered  a  necessity.  The  husband  is  not 
bound,  except  by  his  consent,  by  expenditures  for  luxuries 
or  articles  not  necessary  to  the  station  in  life. 

The  wife  has,  however,  no  power  to  sign  her  husband's 
name  to  notes,  even  for  necessaries,  contracts  for  necessaries, 
checks,  etc.,  except  by  his  appointment  or  consent.  If  a  de- 
posit is  in  the  husband's  name  at  the  bank,  she  cannot  sign 
his  name  to  checks  unless  by  his  consent  her  signature  is  regis- 
tered at  the  bank.  This  is  usually  done  by  writing  the  hus- 
band's name  by  or  per  her  name. 

CONTRACTS  IN  WIFE'S  OWN  RIGHT.  By  the  law  of  most 
states,  the  wife  may  contract  in  her  own  name  and  hold 
property  in  her  own  name  the  same  as  an  unmarried  woman. 
The  old  common  law  that  held  that  a  wife's  property  is 

138 


LEGAL  POINTS  EVERY  WOMAN  SHOULD  KNOW      139 

merged  into  that  of  her  husband  at  her  marriage  is  no  longer 
in  effect.  She  may,  in  most  states,  engage  in  business  and 
bind  simply  her  own  income  and  property,  and  the  profits 
or  property  of  the  business  conducted  in  her  own  name  can- 
not be  taken  for  the  debts  of  her  husband.  In  many  states 
she  cannot  become  surety  for  her  husband  and  in  a  few  states 
she  cannot  be  a  partner  with  her  husband  in  business. 

CONTRACTS  OF  GUARANTY.  When  one  person  agrees  to 
become  responsible  for  the  debt  of  another  he  is  called  a 
guarantor,  or  surety.  No  person  can  be  held  liable  for  the 
payment  of  the  debt  of  another  unless  the  guarantee  is  in 
writing.  If  the  guarantee  is  made  in  writing  when  the 
debt  is  incurred,  the  guarantor  can  be  held  if  the  buyer 
does  not  pay.  But  if  the  debt  had  been  previously  incurred, 
even  a  written  guarantee  would  not  be  good  unless  the 
creditor  was  induced  by  the  guarantee  to  extend  the  time  of 
payment  or  to  give  up  some  legal  right  that  he  had.  For 
example,  if  A  wishes  to  buy  something  from  B  on  credit  and  C 
agrees  to  guarantee  payment  if  A  does  not  pay,  the  contract 
of  guarantee  is  good  if  in  writing.  But  if  A  owed  B  a  debt 
amounting  to  $50  and  C  agreed  to  guarantee  it  in  writing, 
C's  guarantee  would  not  be  good  unless  B  gave  up  some  legal 
right  that  he  had.  If  the  debt  was  due  and  B  agreed  not  to 
prosecute  a  suit  against  A  if  C  guaranteed  it,  or  if  B  agreed 
to  extend  the  time  of  payment,  C's  guarantee  would  be  good. 

In  the  same  way  one  may  guarantee  in  writing  the  proper 
performance  of  a  contract,  such  as  a  lease,  the  performance  of 
a  duty,  the  proper  handling  of  money,  or  the  proper  carrying 
out  of  the  duties  of  an  official  position. 

LAW  OF  BAILMENT.  A  bailment  is  the  leaving  of  an  arti- 
cle with  some  one  to  have  some  work  done  upon  it.  The  one 
who  owns  the  article  is  called  the  bailor  and  the  one  to  whom 


140     HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

it  is  given  is  called  the  bailee.  For  example,  the  taking  of 
one's  watch  to  a  jeweler  to  be  repaired,  a  bicycle  to  a  repair 
shop,  cloth  to  a  tailor  or  dressmaker  to  be  made  into  a  suit 
or  dress,  laundry  sent  to  a  laundryman,  or  goods  to  a  dyer  to 
be  cleaned  or  dyed,  all  constitute  bailments.  The  bailee 
must  take  reasonable  care  of  the  articles  delivered  to  him  but 
is  not  held  liable  for  loss  due  to  fire,  unless  through  his  care- 
lessness, nor  for  loss  due  to  theft,  if  he  has  taken  reasonable  care 
of  the  article,  nor  for  any  loss  due  to  flood,  earthquake,  tor- 
nadoes, or  any  other  act  of  the  elements  that  could  not  be 
foreseen  and  prevented.  All  of  these  rules  apply  to  a  bail- 
ment where  the  bailee  is  paid  something  for  keeping  the 
article  or  for  doing  something  upon  the  article.  Of  course, 
the  bailee  may  make  himself  liable  for  any  loss  due  to  the 
elements,  theft,  etc.,  but  does  so  only  by  special  agreement 
when  he  receives  extra  compensation  for  insurance  against 
these  losses.  When  an  article  is  given  to  another  to  use 
without  any  compensation  for  its  use,  it  is  called  a  gratuitous 
bailment.  In  a  bailment  of  this  kind  the  bailee  must  use  the 
article  as  agreed  upon  and  must  take  the  greatest  care  of  it. 
If  he  misuses  the  article  or  violates  the  agreement,  he  is  held 
liable  for  anything  that  occurs  to  the  article  to  cause  a  loss. 
LAW  OF  TRAVEL.  In  undertaking  a  journey  by  steam  car, 
electric  car,  or  boat,  there  are  certain  rules  that  every  woman 
should  know.  When  she  purchases  a  ticket,  her  contract 
with  the  transportation  company  is  limited  by  the  ticket  she 
purchases.  She  should  see  that  it  is  properly  dated  and  that 
the  limitation  as  to  time  and  use  are  such  as  she  desires. 
If  the  ticket  is  a  signature,  description  ticket,  she  should 
understand  that  the  ticket  is  nontransferable  and  can  be 
used  only  according  to  agreement.  In  checking  her  baggage, 
the  company  agrees  on  the  check  that  she  receives,  to  trans- 


LEGAL  POINTS  EVERY  WOMAN  SHOULD  KNOW      141 

port  the  baggage  to  the  destination  designated  on  the  check 
and  to  be  responsible  for  loss  or  damage  to  the  baggage  not 
exceeding  $100.  If  any  article  of  baggage  is  worth  more 
than  $100,  an  extra  charge  is  made  for  assuming  liability  for 
the  loss  over  $100.  The  transportation  company  is  not 
responsible  for  loss  or  damage  to  baggage  that  is  left  in  a  seat 
or  a  rack  of  the  car  and  is  stolen.  The  transportation  com- 
pany is  responsible  for  the  careful  transporting  of  the  pas- 
senger, and  if  an  injury  occurs  through  carelessness  of  the 
transportation  company,  the  company  is  liable  for  injury  to 
her  person. 

LAW  OF  HOTELS.  The  law  formerly  held  the  hotel  keeper 
to  a  very  strict  responsibility  for  the  person  and  baggage  of 
his  guests.  That  responsibility  has  been  greatly  lessened  by 
statute.  In  most  states  now,  if  the  hotel  keeper  keeps  a 
notice  posted  limiting  his  responsibility  to  the  safekeeping 
of  money  and  valuables  only  if  deposited  with  him  in  the 
hotel  safe,  he  is  not  responsible  for  loss  that  occurs  due  to 
fire,  flood,  or  other  elements,  or  by  theft,  except  when  caused 
by  the  act  of  one  of  the  hotel's  employees.  The  hotel  keeper 
is  responsible  for  any  baggage  from  the  time  it  is  given  into 
the  custody  of  an  employee  of  the  hotel  keeper.  The  hotel 
keeper  has  this  responsibility  for  baggage,  no  matter  whether 
the  guest  takes  a  room  and  sleeps  there  or  whether  she  simply 
eats  a  meal  there. 

INTEREST  IN  PARTNERSHIPS  AND  CORPORATIONS.  In  a 
partnership  each  partner,  no  matter  whether  she  has  an  equal 
interest  in  the  business  or  not,  has  an  equal  voice  in  directing 
it.  She  shares  in  the  profits  and  losses,  however,  according 
to  the  copartnership  agreement.  But  the  most  important 
point  of  law  in  regard  to  partnerships  is  that  each  member 
of  the  partnership  may  be  held  for  all  the  debts  of  the  firm  if 


142      HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

the  partnership  fails  and  other  partners  cannot  pay  their 
share  of  the  loss.  For  instance,  suppose  that  A,  B,  and  C  are 
in  partnership.  The  partnership  becomes  bankrupt  and 
cannot  pay  all  of  its  obligations  from  the  firm  property.  A 
and  B  have  no  property  outside  the  partnership  business 
that  can  be  taken  for  the  debts  of  the  partnership.  C  has 
property  outside  the  partnership  that  may  be  taken  to  pay 
the  debts  that  the  partnership  cannot  pay.  It  will  be  seen 
that  unless  each  partner  is  familiar  with  the  workings  of  the 
business,  is  honest,  and  exercises  the  utmost  good  faith  with 
the  other  partners,  there  is  danger  of  his  being  called  upon 
to  pay  more  than  simply  the  partner's  share  of  the  losses. 

In  purchasing  an  interest  in  a  corporation,  one  receives  a 
certificate  of  stock  saying  that  she  is  the  owner  of  so  many 
shares  of  stock  of  the  corporation.  The  face  value  of  each 
share  is  usually  $100  but  may  be  some  other  amount  if  the 
state  law  does  not  prohibit.  If  the  "buyer  purchases  original 
stock  from  the  corporation  and  pays  the  face  value  or  more 
for  the  stock,  she  cannot  lose  any  more  than  the  face  value 
if  the  corporation  should  fail.  But  if  she  purchases  original 
stock  and  pays  less  than  the  face  value  for  it,  or  if  she  buys 
stock  from  some  one  else  who  has  not  paid  full  value  for  it, 
she  may  be  called  upon  to  make  up  the  difference  between 
what  was  paid  for  the  original  stock  and  the  par  value.  But 
if  one  buys  stock  that  was  once  paid  for  in  full  and  afterwards 
comes  back  to  the  corporation  by  donation,  purchase,  or  for- 
feiture, she  may  safely  pay  any  amount  less  than  par  for  it 
and  cannot  be  called  upon  for  any  more  if  the  corporation 
fails.  This  kind  of  stock  is  called  treasury  stock.  Owners 
of  stock  in  national  and  most  state  banks  are  liable  for  double 
the  par  value  of  the  stock  owned,  that  is,  if  the  bank  should 
fail  and  the  bank  could  not  pay  all  its  obligations  from  the 


LEGAL  POINTS  EVERY  WOMAN  SHOULD  KNOW      143 

property  of  the  bank,  a  stockholder  could  be  called  upon  to 
pay  into  the  bank  an  amount  equal  to  the  par  value  of  the 
stock  which  is  owned. 

DOWER.  Every  wife  has  a  dower  interest  in  the  property 
of  her  husband  which  he  is  possessed  of  at  the  time  of  his 
death.  This  dower  interest  is  a  life  interest  in  one  third  of 
the  real  property  (land,  buildings,  etc.)  that  her  husband 
owned  during  marriage  and  which  he  still  holds  at  the  time  of 
his  death.  If  this  property  is  sold  by  the  husband,  she  must 
join  him  in  the  deed  of  transfer  and  release  her  claim  or 
the  dower  interest  in  this  property  will  continue  against 
the  purchaser  of  the  property.  This  dower  interest  cannot 
be  used  until  the  death  of  the  husband.  It  is  a  life  interest 
only  and  she  can  use  the  income  from  one  third  of  the  real 
estate  during  her  life.  She  has  no  right  to  dispose  of  the 
property  nor  to  waste  it  and  must  keep  it  in  reasonable  repair. 

Her  husband  may  at  his  death  will  her,  in  her  own  right, 
property  which  she  may  take  in  lieu  of  dower.  If  she  accepts 
it,  she  gives  up  her  dower  right. 

QUESTIONS  AND  PROBLEMS  FOR  DISCUSSION 

1.  What  kinds  of  contracts  may  a  wife  make  in  her  husband's 
name  without  his  consent  ? 

2.  May  a  wife  sign  her  husband's  name  to  checks,  notes,  and  other 
legal  papers  ? 

3.  What  is  the  right  of  a  wife  to  engage  in  business  or  to  make  con- 
tracts in  her  own  name  ? 

4.  Mr.  Carroll  has  an  account  in  the  Union  National  Bank,  at  which 
his  signature  only  is  registered.     The  A.  C.  Frey  Co.  presents  a  bill 
during  his  absence.     Mr.  Carroll  has  instructed  his  wife  to  sign  his  name 
to  checks  in  his  absence.     Mrs.  Carroll  writes  a  check  in  favor  of  the 
A.  C.  Frey  Co.  and  signs  her  husband's  name  by  her  name.     Will  the 
check  be  honored  at  the  bank  ?    Explain. 


144     HOUSEHOLD  ACCOUNTING   AND   ECONOMICS 

5.  Mrs.  Wild  has  property  in  her  own  name,  which  was  received  by 
gift  from  her  mother.     Her  husband's  creditors  bring  suit  to  force  her 
to  allow  her  property  to  be  sold  for  his  debt.      Can  they  succeed? 
Why? 

6.  Mrs.  Jeston's  brother,  Arthur  Myers,  owed  the  Norton  Grocery 
Co.  a  debt  amounting  to  $50.     To  save  her  brother's  credit  she  signed 
a  guarantee  that  she  would  pay  the  debt  if  he  did  not.     Her  brother 
did  not  pay.     Can  she  be  forced  to  pay  it.     Why  ? 

7.  A  and  his  wife  are  about  to  lease  a  property  for  one  year  at 
$30  per  month.     The  landlord  demands  a  guarantor  to  sign  the  lease 
at  the  same  time.     C  agrees  to  guarantee  the  proper  payment  of  the 
rent  each  month  and  the  fulfillment  of  the  other  conditions  contained 
in  the  lease.     He  signs  the  lease  as  guarantor.     A  and  B  abandon  the 
lease  and  move  out  at  the  end  of  nine  months.     The  landlord  is  not  able 
to  rent  the  property  for  the  other  months  and  cannot  collect  the  bal- 
ance of  the  rent  from  A  and  B.     The  landlord  seeks  to  hold  C  liable  for 
the  $90.     C  has  received  no  benefit  from  it.     Can  he  be  held  ?     Explain. 

8.  Name  some  of  the  most  important  businesses  that  apply  the 
rules  of  bailment. 

9.  For  what  is  a  bailee  responsible  if  he  is  to  receive  compensation 
for  taking  care  of  the  property  ? 

10.  Mrs.  Bender  borrowed  a  cut  glass  pitcher  for  use  at  a  party.     It 
was  broken  by  her  maid  in  washing  it.     Is  Mrs.  Bender  liable  for  its 
value  ? 

11.  Mrs.  Sanders  borrowed  a  dozen  knives  and  forks  to  be  used  for 
a  party  in  her  home.     She  used  them  for  that  purpose,  then  took  them 
to  a  social,  where  they  were  stolen.     Is  she  liable  for  their  value  ? 

12.  Mrs.  Hills  sent  cloth  to  a  dyer's  to  be  cleaned  and  dyed.     During 
the  cleaning  of  the  cloth,  some  chemicals  exploded  and  set  fire  to  the 
shop,  burning  the  cloth.     Can  the  dyer  be  held  for  its  value  ? 

13.  What  are  the  principal  points  that  a  traveler  should  observe  in 
purchasing  a  railroad  ticket  ? 

14.  What  is  the  carrier's  liability  for  baggage?    For  the  person  of 
the  traveler  ? 

15.  In  stopping  at  a  hotel,  what  should  a  guest  do  with  valuables  ? 

16.  What  is  the  liability  of  a  hotel  keeper  for  a  guest's  baggage  ? 

17.  Why  is  a  partnership  a  dangerous  form  of  business  for  a  woman 
to  enter  ? 


LEGAL  POINTS  EVERY  WOMAN  SHOULD  KNOW      145 

18.  Is  the  liability  of  a  stockholder  in  a  corporation  as  great  as  that 
of  a  partner  in  a  partnership  ?     Explain. 

19.  What  care  should  be  taken  in  buying  stock  in  a  corporation? 
Why? 

20.  What  is  meant  by  a  dower  interest  ? 

21.  In  what  way  can  a  wife  lose  her  dower  interest  ? 

22.  Under  a  right  of  dower,  what  are  the  rights  of  the  wife  in  whom 
is  vested  the  dower  interest  ? 


CHAPTER  XXI 

HOW  TO   WRITE  A  BUSINESS  LETTER 

A  BUSINESS  house  is  very  often  judged  by  the  character 
of  the  letters  it  sends  out,  and  business  houses  often  judge 
the  business  ability  of  individuals  by  the  letters  received 
from  them.  Business  practice  has  prescribed  certain  forms, 
customs,  and  rules  for  letter  writing  that  must  be  followed  by 
those  who  wish  to  be  considered  good  business  correspond- 
ents. These  details  differ  very  greatly  from  those  of  social 
and  friendly  correspondence.  It  is  because  of  this  and  be- 
cause every  woman  should  be  able  to  write  a  good  business 
letter,  correct  in  form  and  detail,  that  this  subject  is  intro- 
duced here. 

A  letter  may  be  divided  into  the  following  parts  :  heading, 
introduction,  salutation,  body,  complimentary  close,  and 
signature. 

THE  HEADING;  This  consists  of  the  address  of  the  writer 
and  the  date.  This  information  should  be  given  at  the  be- 
ginning of  the  letter.  It  is  a  common  thing  to  find  women 
omitting  the  heading  and  placing  the  address  of  the  writer 
and  the  date  at  the  close  of  the  letter  after  the  writer's  signa- 
ture. This  is  a  very  poor  practice  because  business  custom 
has  adopted  the  method  of  placing  these  details  at  the  top  of 
the  letter,  and  business  people  expect  to  find  it  there. 

The  heading  may  occupy  one,  two,  three,  or  four  lines,  de- 
pending upon  the  length  of  the  writer's  address  and  the  size 
of  the  paper  used.  Most  women  use  the  note  size  of  paper 

146 


HOW  TO  WRITE  A  BUSINESS  LETTER  147 

(about  5|  by  6^)  in  writing  business  letters  as  well  as  social 
and  friendly  letters.  For  that  reason,  the  heading  will  usu- 
ally occupy  two  or  three  lines.  Business  houses  usually 
use  the  letter  size  of  paper  (8j  by  11).  The  heading,  when 
written  on  the  letter  size  paper,  seldom  occupies  more  than 
two  lines. 

As  a  rule,  the  heading  should  usually  begin  from  two  to 
two  and  one  half  inches  from  the  top  of  the  page  and  a  little 
to  the  left  of  the  middle  from  left  to  right.  The  following 
illustrations,  with  the  exception  of  the  last,  are  given  as  they 
would  be  made  on  the  ordinary  note  size  paper. 

1. 
Antigo,  Wis.,  July  8,  1916. 

2. 

Bowling  Green,  Ohio, 

Sept.  16,  1916. 

3. 

457-39th  St., 

Milwaukee,  Wis., 

Jan.  10,  1916. 

4. 

Barnard  Hall, 

Univ.  of  Wisconsin, 

Madison,  Wis. 

On  letter  size  paper  the  third  illustration  would  be  written 
as  follows : 

457-39th  St., 

Milwaukee,  Wis.,  Jan.  10, 1916. 


148     HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

The  punctuation  given  here  is  in  accordance  with  the  rules 
most  commonly  used,  but  some  writers  omit  the  comma  at  the 
end  of  each  line.  It  is  poor  form  to  write  the  date  followed 
by  the  terminations  st,  d,  or  th. 

In  writing  a  number  and  a  numerical  street  written  in  fig- 
ures, a  short  dash  should  be  used  as  in  illustration  3.  But  the 
dash  should  not  be  used  when  the  name  of  the  street  is  written 
out  in  full,  as,  383  Tenth  St.  The  comma  is  used  by  some 
writers  to  separate  the  numbers. 

THE  INTRODUCTION.  The  introduction  consists  of  the 
name  of  the  person  to  whom  the  letter  is  written,  the  title, 
and  the  full  address. 

The  introduction  should  begin  on  the  second  line  below  the 
last  line  of  the  heading  and  should  begin  at  the  regular  margin 
of  the  letter.  The  left-hand  margin  should  be  at  least  a  half 
inch  from  the  edge  of  the  paper  and  the  right-hand  margin 
should  be  about  the  same  width  as  the  left.  The  second  line 
of  the  introduction  should  be  indented  about  the  same  dis- 
tance from  the  regular  margin  that  the  regular  margin  is  from 
the  edge  of  the  paper.  The  third  line  should  begin  a  corre- 
sponding distance  to  the  right  of  the  second  line. 

Some  courteous  title  of  respect  should  be  used  either  before 
or  after  the  name  of  the  person  addressed,  except  in  addressing 
a  corporation,  club,  or  society. 

Mr.  should  be  used  in  addressing  a  man  unless  the  person 
addressed  is  entitled  to  some  professional  title.  Esq.,  a  title 
placed  after  the  name  of  a  man,  means  the  same  as  Mr.  but 
is  little  used  in  the  United  States  except  in  addressing  lawyers 
and  some  public  officials  to  whom  no  other  title  is  applied. 
If  it  is  used,  Mr.  should  not  be  used  before  the  name  of  the 
person  addressed. 

Professional  titles,  such  as,  Rev.,  Dr.,  Prof.,  etc.  take  the 


HOW  TO  WRITE  A  BUSINESS  LETTER          149 

place  of  the  title  Mr.  But  the  title  may  be  omitted  before 
the  name  and  placed  after  it,  as  M.D.  for  a  physician,  D.D.S. 
for  a  dentist,  etc.  A  professional  title  should  not  be  used 
both  before  and  after  a  name  unless  the  one  does  not  include 
the  other.  Rev.  Charles  Donald,  D.D.,  and  Prof.  James  C. 
Weaver,  Ph.D.,  are  correct.  A  title  placed  after  the  name 
should  be  separated  from  the  name  by  a  comma. 

Messrs,  should  be  used  in  addressing  a  firm  composed  of 
two  or  more  men  or  in  addressing  a  number  of  men  as  mem- 
bers of  a  committee,  or  not  associated  in  business,  as  Messrs. 
Harvey  &  Grant,  Messrs.  Logan  &  Co.,  Messrs.  Harris, 
Mann,  and  Norton,  Committee. 

The  title  Messrs,  is  also  used  in  addressing  a  firm  composed 
of  men  and  women. 

But  in  writing  to  a  corporation  beginning  with  The  and 
ending  with  Company  no  title  should  be  used,  as,  The  Carr 
Mfg.  Co. 

In  addressing  an  unmarried  woman,  Miss  is  the  correct 
title,  unless  the  woman  has  a  professional  title,  as,  Professor 
Carrie  Dodge,  Dr.  Helen  Wilson.  Misses  is  the  title  that 
should  be  used  for  more  than  one  unmarried  woman,  as,  The 
Misses  Brown. 

A  married  woman  should  be  addressed  by  the  title  Mrs. 
This  is  preferably  prefixed  to  her  husband's  name,  as,  Mrs. 
James  Brown,  but  some  prefer  to  prefix  it  to  her  given  name, 
as,  Mrs.  Mary  Brown.  A  widow  preferably  uses  the  latter 
form. 

Two  or  more  married  women  should  be  addressed  by  the 
title  Mmes.,  the  abbreviation  for  Mesdames,  as,  Mmes. 
Baker  &  Griffin,  in  addressing  a  firm  composed  of  women, 
Mmes.  James,  Evans,  and  Foley,  in  addressing  three  women 
not  associated  in  a  business  way. 


150     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

The  following  examples  illustrate  different  kinds  of  intro- 
ductions : 

Prof.  Charles  F.  Rogers,  Ph.D., 

370  Y.  M.  C.  A.  Bldg, 

Madison,  Wis. 

Messrs.  Franklin  &  Good, 
615  So.  Wabash  Ave., 
Chicago,  111. 

Mr.  C.  J.  Jones,  Manager, 
P.  Gross  Hdwe.  Co., 
Columbus,  Ohio. 

But  if  it  is  desired  to  address  the  firm  and  bring  the  letter  to 
the  attention  of  some  particular  person,  it  may  be  written  as 
follows : 

Johnson  Candy  Co., 

Mr.  D.  E.  Bond,  Manager, 
St.  Paul,  Minn. 

Miss  Helen  Davis, 
Univ.  of  Chicago, 
Chicago,  111. 

Mmes.  Case  &  Gordon, 
Elite  Apartments, 
Detroit,  Mich. 

THE  SALUTATION.  This  is  a  courteous  greeting.  In  the 
ordinary  business  letter  Dear  Sir  should  be  used  in  addressing 
a  man  and  Gentlemen  in  addressing  a  firm  or  corporation.  A 
woman,  whether  married  or  unmarried,  should  be  addressed 
as  Dear  Madam.  A  firm  composed  of  women  or  a  number  of 
women  not  engaged  in  business  should  be  addressed  as  Ladies. 

When  the  letter  is  not  entirely  a  business  letter  or  where  it 


HOW  TO  WRITE  A  BUSINESS  LETTER          151 

is  desired  to  give  a  more  friendly  greeting,  a  salutation  such 
as  the  following  may  be  used :  My  dear  Mr.  Scott,  Dear  Mrs. 
Williams. 

When  a  firm  is  composed  partly  of  men  and  partly  of 
women,  Gentlemen  should  be  used,  although  some  prefer  to 
omit  the  salutation.  In  addressing  a  man  and  his  wife  the 
salutation  may  be  Dear  Sir  and  Madam,  or,  the  salutation 
may  be  omitted. 

In  letters  to  officials,  the  formal  salutation,  Sir  or  Madam 
should  be  used. 

The  salutation  should  begin  at  the  margin  of  the  letter  and 
should  be  followed  by  the  colon  for  a  business  letter  or  by  the 
colon  or  comma  for  a  friendly  letter.  The  colon  and  dash 
and  the  comma  and  dash  are  no  longer  considered  good  form. 

BODY  OP  THE  LETTER.  The  body  of  the  letter  should  begin 
on  the  second  or  paragraph  margin  and  every  paragraph 
should  begin  on  the  same  margin.  The  paragraphs  should 
be  short  and  a  separate  paragraph  should  be  used  for  each 
division  of  the  subject. 

In  referring  to  the  date  of  a  previous  letter  or  to  the  date 
of  the  letter  which  is  being  answered,  the  month  and  day  of 
the  month  should  be  used,  as,  "  I  have  not  received  the  goods 
which  I  ordered  of  you  on  the  6th  of  this  month/'  "Your 
letter  of  May  6  has  been  received."  Do  not  use  the  old  style 
abbreviations  inst.,  ult.,  and  prox.  instead  of  the  name  of  the 
month. 

COMPLIMENTARY  CLOSE.  This  is  a  courteous  closing. 
The  most  common  forms  for  a  business  letter  are:  Yours 
truly,  Yours  very  truly,  Very  truly  yours.  In  closing  a  letter 
addressed  to  an  official,  in  closing  a  letter  of  application  or  a 
letter  asking  a  favor,  Respectfully  yours,  Yours  respectfully, 
or  Respectfully  should  be  used. 


152     HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

The  complimentary  close  should  begin  on  the  next  line 
below  the  close  of  the  body  of  the  letter  and  about  at  the  mid- 
dle of  the  line.  The  first  word  only  should  be  capitalized  and 
the  complimentary  close  should  be  followed  by  a  comma. 

SIGNATURE.  The  signature  should  be  written  on  the  next 
line  below  the  complimentary  close  and  should  end  near  the 
right-hand  margin.  In  signing  a  business  letter,  an  un- 
married woman  should  sign  her  given  name  and  her  surname 
with  Miss  placed  in  parentheses  before  it,  as,  (Miss)  Grace 
Hill.  A  married  woman  should  write  her  given  name  and  her 
surname.  Then  below  it  in  parentheses  she  should  write  her 
husband's  name  with  Mrs.  prefixed,  or,  if  she  wishes  to  be 
addressed  by  her  given  name,  she  may  prefix  Mrs.  in  paren- 
theses before  her  signature. 

Examples :  Clara  Harris. 

(Mrs.  Wm.  Harris.) 

Or, 
(Mrs.)  Clara  Harris. 

A  woman  should  never  sign  simply  her  initials  and  surname. 
The  following  outline  of  a  business  letter  is  given  as  it  would 
be  written  on  note  size  paper : 

360  Grant  Ave., 
Cleveland,  Ohio, 
June  1,  1916. 

Messrs.  J.  A.  Brown  &  Co., 
185  Eighth  St., 

Detroit,  Mich. 
Gentlemen : 

(Body  of  Letter) 
(Paragraph  Beginning) 

Yours  very  truly, 

(Miss)  Florence  Garner. 


HOW  TO  WRITE  A  BUSINESS  LETTER          153 

FOLDING.  Letters  written  on  the  ordinary  note  size  paper 
should  be  folded  once  from  the  bottom  to  the  top  and  placed 
in  the  envelope  with  the  creases  at  the  bottom  and  to  the  left. 
If  the  paper  is  longer,  it  should  be  folded  first  from  the  top 
down  less  than  a  third  of  the  length  and  then  from  the  bottom 
up  to  within  about  half  an  inch  of  the  top  fold  and  placed 
in  the  envelope  in  the  same  way. 

Letters  written  on  letter  size  paper  ordinarily  used  by 
business  men  should  be  folded  as  follows  : 

1.  Fold  the  sheet  from  the  bottom  to  within  about  one 
quarter  inch  of  the  top. 

2.  Fold  from  the  right  to  the  left  a  little  less  than  one  third 
of  the  width  of  the  sheet. 

3.  Fold  from  left  to  right  to  within  about  one  quarter  inch 
of  the  right  fold. 

4.  Insert  the  letter  in  the  envelope,  held  in  the  hand  with 
the  address  side  down,  with  the  creased  edges  to  the  right 
and  at  the  bottom. 

THE  ENVELOPE.  The  address  on  the  envelope  should  be 
the  same  as  the  introduction  at  the  beginning  of  the  letter. 


Mrs.  W.  H.  Moore 
1715  North  Ave. 
Milwaukee,  Wis. 


€.  S. 

6/6 


154     HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

Most  business  houses  use  no  mark  of  punctuation  at  the  end 
of  each  line  except  for  abbreviations,  although  some  still 
use  the  comma.  The  return  address  should  always  be  placed 
either  in  the  upper  left-hand  corner  or  on  the  back  across  the 
lower  part  of  the  flap.  The  form  on  page  153  is  recom- 
mended by  the  postal  authorities. 

Some  special  points  to  be  observed  in  writing  different  kinds 
of  letters  as  well  as  suggestive  letters  of  different  types  will 
now  be  given. 

LETTERS  ORDERING  GOODS.  In  writing  a  letter  ordering 
goods,  the  order  should  be  made  very  complete.  It  should 
usually  contain 

1.  A  reference  to  the  catalog  from  which  the  goods  are 
ordered.    This  should  definitely  state  the  year  of  the  cata- 
log and  the  month  or  season,  if  given,  and  if  the  catalog  has 
a  number,  it  is  best  to  mention  it  in  the  order. 

2.  A  definite  statement  of  the  goods  ordered.    This  should 
include  the  quantity,  the  catalog  number,  a  description  as  to 
size,  color,  material,  etc.,  the  price  of  each  article  singly, 
and  the  total  price.    The  articles  ordered  should  be  arranged 
in  tabular  form  like  the  illustration  on  page  155. 

3.  The  method  of  shipment,  whether  by  express,  freight, 
or  parcel  post,  the  date  on  which  the  goods  are  desired,  and 
the  destination  if  different  from  the  writer's  address  should 
be  given. 

4.  If  a  remittance  is  made,  the  letter  should  state  the  form 
of  the  remittance,  as,  postal  money  order,  express  money 
order,  check,  or  draft,  and  the  amount  of  the  remittance. 
The  amount  should  be  written  in  figures  only. 

Firms  doing  a  mail  order  business  usually  provide  printed 
order  blanks  for  their  customers.  If  the  order  blank  pro- 
vides a  space  for  remarks,  no  letter  is  necessary. 


HOW  TO  WRITE  A  BUSINESS   LETTER          155 

Letter  Ordering  Goods 

785  W.  Cass  St., 
Toledo,  Ohio, 

May  7,  1916. 
Messrs.  C.  Scott  &  Co., 
175  State  St., 

Chicago,  111. 
Gentlemen : 

Please  ship  the  following  order,  taken  from  your  1916 
Spring  catalog,  by  American  express  : 

6  pair  Ladies'  Lisle  Hose,  black,  size  8i,  at  50c      $3.00 
1  pair  Ladies'  Kid  Gloves,  tan,  size  5i  1.50 

10  yds.  Taffeta,  white,  No.  6,  like  sample,  at  25c        2.50 

$7.00 

Please  ship  the  goods  so  that  they  will  reach  me  not  later 
than  May  15. 

Inclosed  you  will  find  a  postal  money  order  for  $7  to 
pay  for  the  above  order. 

Yours  very  truly, 

T    j  (Signature) 

Inclosure. 

Letter  Ordering  a  Magazine 

716  W.  45th  St., 
St.  Paul,  Minn. 

Dec.  10,  1916. 

Good  Housekeeping  Magazine, 
119  W.  Fortieth  St., 

New  York  City,  N.  Y. 
Gentlemen : 

Inclosed  you  will  find  a  postal  money  order  for  $2.50, 
for  which  please  renew  my  subscription  to  the  Good  House- 


156     HOUSEHOLD  ACCOUNTING  AND   ECONOMICS 

keeping  magazine  to  the  above  address  for  one  year,  and 
send  the  magazine  for  one  year  to  Mrs.  Henry  J.  Garner, 
2775  Highland  Blvd.,  Milwaukee,  Wis.  This  is  in  accord- 
ance with  your  offer  on  page  7  of  the  December  issue. 

Both  the  renewal  and  the  new  subscription  should  begin 
with  the  January  1916  issue. 

Yours  very  truly, 

Hattie  Howard. 
(Mrs.  James  W.  Howard.) 
Inclosure. 

LETTERS  OF  APPLICATION.  It  is  difficult  to  give  rules  for 
writing  letters  of  application  because  so  many  things  must  be 
taken  into  consideration.  Good  writing,  correct  spelling, 
neatness,  attention  to  form  and  arrangement,  and  a  good 
quality  of  paper  are  absolutely  essential.  Originality,  not 
freakishness,  is  sure  to  command  attention.  The  letter  of 
application  should  state  the  writer's  qualifications  in  a 
modest^  truthful,  and  dignified  manner. 

A  letter  of  application  should  usually  state  the  following 
facts : 

1.  How  the  information  about  the  vacancy  was  obtained. 
It  may  have  been  from  an  advertisement,  from  an  agency, 
or  from  some  individual.     The  advertisement  may  give  the 
name  of  the  advertiser,  but  more  commonly  it  is  impersonal. 

2.  Qualifications,  including  age  (usually),  education,  es- 
pecially the  training  that  pertains  directly  to  the  position 
applied  for,  and  experience. 

3.  References  or  testimonials.     The  applicant  should  refer 
to  persons  who  can  give  information  about  the  ability  and 
character  of  the  applicant.     The  name,  address,  and  position 
held  should  be  given  definitely.     It  is  best  to  obtain  permis- 


HOW  TO  WRITE  A  BUSINESS  LETTER          157 

sion  to  do  this  before  giving  the  names  as  references.  Testi- 
monials or  recommendations  are  not  much  used  any  more 
except  when  the  advertisement  calls  for  them.  Copies  should 
always  be  sent  and  not  the  originals. 

4.  Any  other  information,  such  as  a  statement  of  the  salary 
wanted,  should  be  given. 

5.  A  Closing  Statement.     This  should  be  a  short,  cour- 
teous request  for  an  interview,  or  the  expression  of  a  hope 
that  the  application  may  be  favorably  considered. 

Letter  of  Application 

517  Wright  St., 
Chicago,  111., 

April  10,  1916. 
B178, 

Chicago  Tribune, 
Chicago,  111. 
Gentlemen : 

In  answer  to  your  advertisement  in  yesterday's  Tribune, 
I  wish  to  apply  for  the  position  of  clerical  assistant  in  your 
office. 

I  am  18  years  of  age.  I  completed  the  commercial 
course  in  the  Parker  High  School  of  this  city  last  June.  In 
that  school  we  were  given  special  work  in  rapid  calculation, 
penmanship,  correspondence,  business  forms,  typewriting, 
shorthand,  and  other  subjects  pertaining  to  office  work. 
Since  last  September,  I  have  been  employed  as  an  assistant 
in  the  Hyde  Park  Branch  Library,  but  desire  to  obtain  em- 
ployment in  a  business  office  instead. 

As  to  my  character  and  ability,  I  refer  you  to  Miss  Clara 
Scott,  an  instructor  in  Parker  High  School,  and  Mr.  Chas. 


158     HOUSEHOLD  ACCOUNTING  AND  ECONOMICS 

Martin,  head  of  the  Hyde  Park  Branch  Library,  both  of  this 
city. 

I  believe  that  if  I  am  given  a  trial  I  can  do  your  work 
satisfactorily.  I  should  be  glad  to  make  a  personal  appli- 
cation at  some  convenient  time.  My  telephone  number  is 

Kedzie  1736. 

Respectfully  yours, 

(Signature) 

Exercise  28.  From  a  catalog  or  advertisement,  order 
three  books.  Inclose  a  money  order  in  payment. 

Exercise  29.  Order  a  pair  of  shoes  from  The  Rich  Shoe 
Co.,  Toledo,  Ohio.  Give  all  the  necessary  details.  Inclose 
$1  and  ask  them  to  send  the  shoes  by  express  C.  O.  D.  with 
the  privilege  of  examining  them  before  paying  the  balance. 
This  is  in  accordance  with  their  offer  on  page  73  of  their 
Spring  catalog  of  1916. 

Exercise  30.  Order  The  Century  Magazine  published  by 
The  Century  Co.,  353  Fourth  Ave.,  New  York,  N.  Y.  In- 
close a  money  order  in  payment  of  the  subscription  price  for 
one  year,  $4. 

Exercise  31.  Answer  the  following  advertisement: 
Wanted.  Young  woman  as  office  clerk  and  typist;  no 
shorthand;  state  age,  training,  experience,  and  give  refer- 
ences. Address  J  75,  Sentinel. 

Exercise  32.  Answer  the  following  advertisement: 
Wanted.  Young  woman  about  18  years  of  age  to  do  clerical 
work  and  answer  the  telephone.  One  with  some  knowledge 
of  shorthand  preferred.  No  experience  necessary.  Apply 
by  letter.  C.  E.  Kline  &  Co.,  615  Ninth  St. 

Exercise  33.  Answer  the  following  advertisement.  A 
young  woman  of  training  and  experience  to  take  charge  of 
a  high-class  cafeteria  catering  to  women.  Give  details  and 
references.  Address  Box  475,  Cleveland,  Ohio. 


INDEX 


Accident  insurance,  117 

Account,  explanation  of,  61 

Accounts,  personal,  1 

Application,  letter  of,  157 

Asset  and  expense,  distinction  be- 
tween, 84 

Assets  and  liabilities,  statement  of, 
79,  85 

Assets  defined,  83 

Bailment,  laws  of,  139 
Bank  account : 

how  to  open,  43 

what  may  be  deposited  in,  46 
Bank  statement  of  account,  55 
Body  of  business  letter,  151 
Bonds : 

accrued  interest  on,  120 

as  an  investment,  119 

how  quoted,  119 

per  cent  of  yield  on,  119 
Budget,  the  family : 

an  estimate,  26 

definition  of,  15 

how  to  make  out,  20 

tabulated,  26,  27 

Building  and  loan  association,  125 
Business  letter : 

body  of,  151 

complimentary  close,  151 

heading,  146 

how  to  fold,  153 

introduction,  148 

parts  of,  146 

salutation,  150 

signature,  152 
Buying  a  home : 

advantages  of,  121 

disadvantages,  121 

methods  of  financing,  122 

Card  system  of  keeping  accounts,  61 
Cash  book : 

columnar,  34,  35 


personal,  4 

personal,  how  proved,  9 

personal,    with    distributive    col- 
umns, 10,  11 

society,   club,    or    association,  98, 
99 

two-column  explained,  3 
Charge  ticket,  47 
Check  book,  51 
Checks : 

advantages  of  the  use  of,  50 

cash,  52 

certified,  54 

how  to  write,  51,  52,  53 

to  pay  a  club  or  society,  54 

to  pay  a  professional  man,  54 
Check  stub,  52 
Club  and  society  accounts : 

accounts  kept,  93 

how  entries  made  in  cash  book,  92, 
98,  99 

how  entries  made  in  journal,  94, 
97 

how  posted  to  the  ledger,  100,  101 

statement    of    receipts    and    pay- 
ments, 102 

trial  balance  of,  102 

unpaid  bills,  103 
Complimentary   close  of  a  business 

letter,  151 
Consumption,   an  element  of  home 

economics,  14 

Contracts,  rules  for  signing,  129 
Convertible  term  insurance,  116 
Corporations,  interest  in,  142 
Credit,  93 
Credit  accounts,  66 

Debit,  93 

Deficit,  84 

Deposit,  how  to  make  by  mail,  49 

Deposit  ticket,  45 

Deposit  ticket,  duplicate,  49 

Deposit  ticket,  savings,  109 


159 


160 


INDEX 


Depreciation  on  household  goods,  73 
Double  entry  system,  92,  94 
Dower,  143 

Economics  of  the  household,  14 
Endowment  insurance,  115 
Engel's  law : 

classification  of  expenditures  under, 
17 

expenditures  under,  tabulated,  18 

principles  of,  15 
Entries,  62 

Envelope,  how  to  address,  153 
Envelope  system  of  keeping  accounts, 

58 
Expenditures : 

for  clothing,  23 

for  food,  22 

for  operating  expenses,  22 

for  rent,  21 

for  the  higher  life,  23 
'  ideal  division  of,  18 
Expenses  distinguished  from  expendi- 
tures, 80 

Family  accounts : 

based  on  the  family  budget,  31 

how  to  enter  in  cash  book,  32,  34, 
35 

how    to    enter   in    journal  or  day 
book,  36 

how  to  keep,  32 
Family  cash  book,  34,  35 
File  for  bills,  67 
Fire  insurance,  76 
Fraternal  insurance,  114 

Guaranty,  contracts  of,  139 

Heading  of  business  letter,  146 
Health  insurance,  117 
Higher  life,  classification  of  expendi- 
tures under,  75 

Hire  of  service,  legal  rules  of,  134 
Hotels,  law  of,  141 
Household  accounting  set,  88 
Household  inventory,  72,  75 

Income  and  expenses,  statement  of, 

79,  83 
Income  distinguished  from  receipts, 

79 


Indorsements : 

blank,  47 

full,  47 
Installment  purchases : 

how  entered,  67 

how  inventoried,  76 

how  sold,  131 

how    valued    in    the    statements, 
85 

legal  rules  for,  130 
Insurance : 

accident,  117 

convertible  term,  116 

fire,  76 

fraternal,  114 

health,  117 

legal  reserve,  115 

life,  114 

policies,  72,  77 

Introduction  of  business  letter,  148 
Inventory,  household,  72,  75 
Investments  for  the  home,  119 

Journal,  97 


notice  to  vacate  under,  133 

provisions  of,  133 

with  option,  124 
Letter  ordering  a  magazine,  155 
Letter  ordering  goods,  154,  155 
Letters  of  application,  156,  157 
Life  insurance : 

how  financed,  116 

kinds,  114 

kinds  of  policies,  115 

premium,  116 

surrender  values,  117 

Married  woman's  right  to  contract  in 

husband's  name,  138 
Married  woman's  right  to  contract  in 

own  name,  138 

Necessaries,  classification  of  expendi- 
tures for,  17 

Orders    for    goods,    legal    rules    for 
canceling,  130 

Partnership,  legal  rules  for,  141 
Pass  book,  48 


INDEX 


161 


Payments  by  check,  legal  rules  for, 

132 

Payments  in  money,  legal  rules  for,  131 
Personal  accounts : 

advantages  of  keeping,  1 

classified,  7 

how  balanced,  3 

how  kept,  3 

summarized,  7 
Posting,  62 

Receipt,  savings  bank,  111 
Resource,  83 

Sale  of  goods : 

remedies  for  breach  of  guarantee, 

130 
when  guarantee  of  quality  implied, 

130 

Salutation  of  business  letter,  150 
Savings  bank  accounts : 

how  opened  by  a  married  woman, 

107 

how  opened  for  a  minor  child,  107 
interest  on,  how  computed,  108 


joint,  107 

rules  governing,  107 
Savings  deposit  ticket,  109 
Signature,  legal,  44 
Signature  of  a  business  letter,  152 
Standard  of  living,  17 
Statement  of  assets  and  liabilities,  79, 

85 
Statement  of  income  and  expenses. 

79,  83 

Summary,  monthly,  41 
Summary  of  expenses,  8 
Surplus,  84 
Surrender  values,  84 

Travel,  law  of,  140 
Trial  balance,  97,  102 

Unexpended  balances : 
how  found,  39 
how  proved,  40 
table  of,  40 

Warranty  of  quality  in  the  sale  of 
goods,  when  implied,  1-30* 


Printed  in  the  United  States  of  America. 


1HE  following  pages  contain  advertisements  of  a 
few  of  the  Macmillan  books  on  kindred  subjects 


Foods  and  Household  Management : 
A  Textbook  of  the  Household  Arts 

By  HELEN  KINNE,  Professor,  and  ANNA  M.  COOLEY,  Associ- 
ate Professor  of  Household  Arts  Education  in  Teachers  College,  Co- 
lumbia University 

Cloth,  12°,  illustrated,  390  pages,  $i./o 

This  volume,  like  its  companion,  "  Shelter  and  Clothing,"  is 
intended  for  use  in  the  course  in  household  arts  in  the  high 
school  and  normal  school,  whether  the  work  be  vocational  or 
general  in  its  aim.  It  is  hoped  that  both  volumes  will  prove 
useful  in  the  home  as  well,  including  as  they  do  a  treatment 
of  the  homecrafts,  and  the  related  topics  now  so  significant 
to  the  homemaker  —  the  cost  and  purchasing  of  foods  and 
clothing,  the  cost  of  operating  and  the  management  of  the 
home,  and  questions  of  state  and  city  sanitation  vital  to  the 
health  of  the  individual  family. 

The  text  treats  specifically  of  foods,  their  production,  sanita- 
tion, cost,  nutritive  value,  preparation,  and  serving,  these  topics 
being  closely  interwoven  with  the  practical  aspects  of  household 
management ;  and  they  are  followed  by  a  study  of  the  house- 
hold budget  and  accounts,  methods  of  buying,  housewifery,  and 
laundering.  It  includes  about  160  carefully  selected  and  tested 
recipes,  together  with  a  large  number  of  cooking  exercises  of 
a  more  experimental  nature  designed  to  develop  initiative  and 
resourcefulness. 

The  book  is  new,  practical,  and  economical.  It  is  well  illus- 
trated and  attractively  bound. 


THE    MACMILLAN    COMPANY 

NEW  YORK  BOSTON  ATLANTA 

CHICAGO  SAN  FRANCISCO  DALLAS 


A  Textbook  of  Domestic  Science 

By  MATILDA  G.  CAMPBELL,  Instructor   in  Home  Economics, 
Jesup  W.  Scott  High  School,  Toledo,  Ohio 

Cloth,  12°,  illustrated,  219  pages,  90  cents 

Neatness  —  Order  —  Economy  —  Accuracy  —  these 
form  the  text  of  a  very  efficient  and  up-to-date  treatment 
of  the  course  in  Domestic  Science  for  secondary  schools. 
Food  classification,  the  hygienic  and  dietary  value  of  vari- 
ous foods,  the  chemistry  of  foods  and  of  food  preparation, 
are  treated  adequately  and  with  careful  correlation.  The 
book  emphasizes  the  importance  of  variation  in  diet  and 
the  judicious  combination  of  food  nutrients. 

Among  the  most  interesting  chapters  are  those  on 
Soups  ;  Fruits  and  Food  Preservation  ;  the  Protein  Foods ; 
Eggs,  Meats,  and  Milk  Products;  Leavening;  Batters, 
Doughs,  Breads ;  Fats ;  Mineral  Foods ;  Salads ;  Cakes 
and  Puddings;  Invalid  Cookery;  Table  Service.  The 
planning  of  a  dinner  as  well  as  the  proper  preparation  of 
it,  and  the  graceful  serving  of  it,  are  practical  problems 
which  this  book  will  help  the  inexperienced  housewife  to 
solve.  It  covers  completely  the  proper  field  of  the  cook- 
ing course  and  provides  a  practical  working  basis  for 
homemakers,  domestic  managers,  and  students  of  domestic 
problems. 


THE  MACMILLAN  COMPANY 

NEW  YORK  BOSTON  ATLANTA 

CHICAGO  SAN  FRANCISCO  DALLAS 


BOOKS  FOR  REFERENCE  IN  THE  COURSE  IN  HOUSEHOLD  ARTS 


BAILEY  —  Textbook  of  Sanitary  and  Applied 

Chemistry $1.40 

BRUERE  —  Increasing  Home  Efficiency  .  .  .  1.50 

BUCHANAN  — Household  Bacteriology  .  .  .  2.25 

CLARK  —  The  Care  of  a  House 1.50 

GIBBS  —  Food  for  the  Invalid  and  Convalescent  .75 

HARRISON  —  Home  Nursing i.oo 

JORDAN  —  Principles  of  Human  Nutrition  .  .  1.75 
KAHLENBERG  AND  HART  —  Chemistry  and 

Its  Relations  to  Daily  Life 1.25 

LYNDE  —  Physics  of  the  Household  .  .  .  .  1.25 
MATTESONAND  NEWLANDS  —  Laboratory 

Manual  of  Foods  and  Cookery  .  .  .  .  1.50 

ROSE  —  Handbook  for  Dietetics i.io 

SHERMAN  —  Chemistry  of  Food  and  Nutrition  i  .50 

SHERMAN  —  Food  Products 2.25 

SNELL  —  Elementary  Household  Chemistry  .  1.25 
SNYDER  — Human  Foods  and  their  Nutritive 

Value 1.25 

WING  —  Milk  and  Its  Products 1.50 

WOOLMAN  AND  McGOWAN  —  Textiles  2.00 


THE   MACMILLAN   COMPANY 

NEW  YORK  BOSTON  ATLANTA 

CHICAGO  SAN  FRANCISCO  DALLAS 


Business  Arithmetic   for   Secondary  Schools 

BY  ERNEST  L.  THURSTON 
Superintendent  of  Schools,  Washington,  D.C. 

Cloth,  I2mo,  illustrated,  431  pages.     List  price,  $1.00 


This  book  is  designed  for  use  in  those  schools  in  which  it  is 
desired  to  emphasize  the  practical  rather  than  the  merely  theoretical 
phases  of  the  subject.  The  principles  of  arithmetic  are  by  no 
means  neglected ;  in  fact,  the  simple  logical  development  and  state- 
ment of  these  principles  is  one  of  the  most  noteworthy  features  of 
the  boot.  The  author  does  not  stop  here,  however,  but  goes  on  to 
show  how  arithmetic  is  used  in  the  actual  processes  of  business  life. 
The  book  not  only  furnishes  an  excellent  drill  in  arithmetical  prin- 
ciples and  processes,  but  it  introduces  the  student  to  business 
technique. 

Problems  are  original  and  vital  and  they  are  numerous  enough 
to  provide  abundant  practice  without  becoming  a  burden.  The  great 
variety  of  form  in  which  they  are  stated  serves  to  increase  interest 
and  to  emphasize  principles  rather  than  form  of  statement. 

Among  the  topics  of  common  interest  treated  are  rapid  adding, 
short  methods  in  multiplication,  averaging,  making  change,  house- 
hold expenses,  payment  for  service,  advertising,  aliquot  parts,  practi- 
cal measurements,  composite  units,  graphic  arithmetic,  insurance, 
savings  accounts,  bids  and  estimates. 

The  book  is  alive  from  beginning  to  end. 


THE    MACMILLAN    COMPANY 

64-66  FIFTH  AVENUE,  NEW  YORK  CITY 

BOSTON  ATLANTA  DALLAS 

CHICAGO  SAN  FRANCISCO 


' D    OU7IO 


45       ! 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


